Introduction

 Today, competitors in global markets have actually ended up being extreme and in order to
sustain appropriate position, companies require to assume competitive strategies so that they
can get competitive advantages. (Rao, pp. 185, 2011) The vibrant condition of markets has
made it complicated for the companies to achieve higher level of success without utilizing
specialists' promoted designs and literatures. (Flouris, Oswald, pp. 19, 2006) For this reason,
researches have actually made it basic for the companies to complete at more comprehensive
level yet these researches merely gives method to these companies and they require to
establish the tactical plans on their own. Various companies embrace various type of
competitive methods in order to get greater position in competitive market and for this
purpose, it used to perform different activities than the completing firms. (Daft, pp. 65, 2009)
Virgin Airlines is one of the organizations who have actually presumed genuine methods in
order to satisfy consumer's need and eventually got extraordinary position. This paper is
essentially an analysis of the competitive method of Virgin Atlantics which it has actually
used in order to gain competitive advantage.

Overview of the Company

Virgin Atlantic was launched by founder Richard Branson on the 22nd June 1984.The vision
of the airline was to offer high quality services combined with good value for money.
Working in Music industry for many years Branson himself knew little about the aviation
industry therefore he used the advice of his partner, Freddie Fields to manage the venture
along with his technical manager Roy Gardner. As a result of working in the Music Industry
Branson was all too familiar with celebrity obsessed culture and thus he packed the first flight
was between London and Newark Liberty with some well known celebrities.

Virgin Atlantic credit the use of the famous faces seen travelling on the inaugural fight as one
of the factors of success in launching the airline. Virgin Atlantic employs a three year
strategy which thus far has proved successful. Low cost airlines offer a typically narrow
service where as Virgin Atlantic, through their code-sharing agreements; position themselves
as offering a broad range of exotic destinations for people who are willing to pay premium
prices. This business model has the key understanding that the way in which the product is
positioned and the experience provided travelling by virgin Atlantic, will ensure customers
will travel again and again thus allowing them to achieve their long-term strategic objectives
of increasing profits and shareholder values. 2. One of the key factors in the business model
is ‘how’ Virgin Atlantic provide a unique flying experience, virgin maintain this positive
feeling with the friendly flight attendants and the positive attitudes they show customers. The
airline ensures the happiness of staff with fair wage, discounts on fairs as well
as loyalty schemes. 

Company Strategy Presentation

Strategic Management and its Components

Internal Analysis
SWOT analysis

Strengths:

 Brand name: Virgin has a strong brand name in countries like UK, USA, and
Australia.. Products coming from virgin can survive in the market very easily
and they can get good recognition and publicity without making more
advertisement.
 Different types of distribution: Virgin has two different types of distribution
units. First is to sell the products in retail stores and the second is to sell
through online. Customers can use any of these services according to there
comfortable levels.
 Various processes to export: Virgin has different methods of transportation
facilities to export its products.
 IT professionals: It has highly skilled software professionals who work with
great commitment to give the best quality of service to its customers.
 High budget: Virgin group has enough money to invest into any kind of
business and it is earning huge profits every year for its products and it is
expanding to different countries every year.

Weaknesses:

 Loose supervision: As virgin is a group of different companies and each field

has its own managers, the supervision of the company is becoming hard for
anyone and control goes out of hand sometimes.
 Communication gap: There is a lot of communication gap between each
company. Only the website to approach to the company is same but the
communication between different sectors of business is very weak.
 Bad transportation: There is a bad transportation facility and there is no
punctuality in trains and other public transportation facilities where all these
are affecting the company progress.
 Outdated machinery: Some of the virgin products use outdated machines and
these cause a great trouble to the customers and employees in it.
Opportunities:

 Expand to overseas: Virgin has the opportunity to expand to overseas and

make its market to reach to more customers as it is a familiar product in many
countries.
 Virgin could get better deals: Virgin has the opportunity to get more deals
from more countries as it is always ready to expand its business and it is ready
to make partnership with any other company for its progress.
 Opportunities of training: There are many opportunities for training for fresher
and retraining to other individuals in the company.
  Using high technology goods: It has the opportunity to improve itself by
improving its technology and usage of new technologies in different sectors
and making customer easy to understand about the services you offer.

Threats:

 The success of virgin group mainly depends on the corporate parenting

strategy which is led by Richard Branson. It is sustained through its strategies
if it goes well in the market and gives competition to other companies.
 In the long run Branson has to put his succession ideas and strategies for the
future running of business and they require implementing properly to reach
the targets of the company.
 Virgin has to take care about its strong leadership for the future and the
implementation of its company policies and strategies for the long run of the
company by managing all the companies under it carefully.

External Analysis

Pestle Analysis

1. Political factors: The main external factor for Virgin Atlantic that had a great effect
was the decision of Brexit. Although the then political turmoil had raised questions
over the airline’s services, later the airline has benefited from the decision as the new
runway at Heathrow was approved.
2. Economic factors: Again, Brexit had created a major economic turmoil. This had
presented a problem for Virgin Atlantic as well. The company saw a huge drop in
turnover due to the difference of Pound Sterling and Dollars. But on the other hand, it
made some profits on the fuel cost due to the same reason.
3. Social factors: Social factors are mostly external factors that no organisation have
control over. Like so, in 2016 the ATC strike in France had posed difficulties for the
Virgin Atlantic
4. Technological factors: Technology has an effect all over the business segment.
Virgin Atlantic is no exception. Due to the emergence of the internet and online
booking and comparison sites, the airline’s decisions are being affected. The company
has introduced AIR4, which is an app-based service system for its customers with
booking functionality. The company has also introduced an IT support team for this
particular venture.
 5. Legal factors: Legal factors can affect an organisation like Virgin Atlantic’s decision
manifold. As an example, the airline’s action over PPU has led to the demand for PPU
being the only recognized “union”.
6. Environmental factors: As an airlines organisation environmental factors affect the
airlines in a great way. Flights are often disrupted when there are environmental
hazards.

Porter's Five Forces Analysis

1. Competitive rivalry-Very High: This points out how many competitors are in the
market and who they are. This also includes the competitors’ strengths and
weaknesses. If this “rivalry” is intense between two organisations, the pricing of the
service or products tend to lower due to both organisations wanting to achieve.
For Virgin Atlantic, competitors are other local and international airlines. And they
are the most powerful threat for the organisation and this threat is of a very high
level. Both local and international market is highly competitive. International airlines
like Qatar Airways, Emirates, and local airlines like British Airways, Ryanair are
tough rivals of the Virgin Atlantic. All of the airlines mentioned always thrive to be
the topmost. This is a huge competition for Virgin Atlantic.
To survive in this competitive situation Virgin Atlantic can choose to reduce their cost
by cost-cutting techniques and approaches. But that might lead to a decrease in
customer experience.
2. The threat of new entry-Very Low: This force considers the barriers that a
potential new entry to the market might face upon entering. A lower barrier means a
higher threat to existing organisations. So, this has to be kept in mind that any
airlines could break this barrier to gain a new entry in the existing market with new
strategies and market plan. Although this chance is pretty low, any existing airline
company like Virgin Atlantic should consider upholding their values and look for
ways to get a competitive advantage in the market(Mindtools.com, 2019). So the
threat of new entry is very low according to the current state of the industry.

3. The threat of substitution-Low: Another industry in the market provides the

substitutions, i.e. services or products. For Virgin Atlantic, the substitutions can be
trains, buses, cars, and boats. But these are not completely a high threat because
 these substitutions can only be applied for short-haul distances. So a long haul
distance transport provider like Virgin Atlantic will face medium to the low threat
with these substitutions. And due to having targeted customers and time is a very
important fact for many customers the short-haul transportation will not be affected
severely. The threat of substitution is medium to low for Virgin Atlantic
4. Buyer power or bargaining power of buyers-Low: Any buyer of any given
industry wants to bargain about the price of the product or service they will receive..
In comparison to EasyJet having 68,222,244 flights in 2018 Virgin Atlantic had only
4,872,280 flights. This is indicative ofhow low-cost flights can have a huge impact
on the airline's industry. So, the bargaining power is high for the customers. And
airlines like Virgin Atlantic has to look for cheaper pricing without compromising
customer satisfaction to have a competitive advantage. This is only of a Medium to
the low level of threat
5. Bargaining power or power of suppliers-High: For the airline's industry the
suppliers play a hugely important role due to their small numbers.
Again, the next most fundamental suppliers the organisation needs is airports. The
organisation has to maintain all of the rules and regulations of any airports they want
to use. For example, Heathrow Airport Ltd has a monopolistic bargain over the
organisation.
On the other hand, for fuel and catering services, the organisation can squeeze out
some bargains to get a better price for the products and services.
So, the threat of supplier bargaining is high for the organisation.

Company Financial Performance

Virgin Atlantic has managed a pretax profit of 41.6 million pounds ($76.1 million) on
record annual sales of 1.91 billion.The carrier shared that a rise in business class
travel helped more than double its pretax, pre-exceptional performance, which stood
at 20.1 million pounds for the year ago period. Sales were up 17 percent for its
financial year, which ended on February 28 Carrying a record 4.9 million passengers,
Virgin had a 2005-06 pre-tax, pre-exceptional items profit of £41.6m – more than
double the figure for 2004-05.Virgin’s results announcement comes after reports that
it was Virgin that “blew the whistle” on British Airways which is now being
investigated by the UK’s Office of Fair Trading (OFT) and the US Department of
Justice over alleged cartel activity involving BA and other airlines. Virgin has said that
it is helping the OFT and the justice department with their inquiries.Chief executive
Steve Ridgway reportedly said the strong performance came on the back of a 10
percent increase in the number of passengers using its Upper Class cabin and the
grabbing of market share on the North Atlantic.

According to media, Ridgway denied, however, that Virgin had used the fuel
surcharge – like BA’s, £70 on a round-trip ticket – to bolster revenues. “The fuel
surcharge has not kept pace with the increased cost of fuel,” he reportedly said. “It
has only enabled us to recover around half of our fuel costs. Whereas fuel used to be
around 15-16 percent of our costs it is now nearer 30 percent.”Ridgway declined to
comment in detail on why Virgin had blown the whistle on alleged conversations
between it and BA, which prompted an OFT probe into alleged fuel surcharge price-
fixing. According to a report: “BA and VA impose the same surcharge of pound stg.
35 ($87) per individual long-haul flight (pound stg. 70 for a return trip). While BA had
often been among the leaders in raising the fuel surcharge, on some occasions Virgin
Atlantic, its main long-haul competitor at Heathrow, had also taken the lead. On
most occasions the other airlines quickly followed the lead of the first mover. Last
September, VA raised the long-haul surcharge from pound stg. 24 to pound stg. 30.
It was followed in the same week by BA with the same increase. Virgin lowered the
surcharge again in November to pound stg. 25, but BA did not follow suit and in
January Virgin returned to pound stg. 30. In March, VA raised the levy to pound stg.
35. BA followed to pound stg. 35.

Company Strategy Evaluation

ANSOFF MATRIX

The Ansoff matrix provides the basis for an organization’s objective setting process and sets
the foundation of directional policy for its future (Bennett, 1994). Product development
strategy and the Market development strategy, to become the most successful organization
Virgin Atlantic should follow both of them.

The product development strategy suggested through Ansoff’s matrix can be a very
good strategy for Virgin Atlantic because of the type of customer base, the company
possess. The company has good customer base of upper class families and corporate
tycoons.

Another option available with Virgin Atlantic is market development strategy which
involves search of additional geographical regions and additional market segment. If
we compare the flights/services offered by Virgin Atlantic with British airlines, there is
a large gap. Although Virgin Atlantic is UK’s second largest airline but it operates
flights to only 26 major destinations whereas against BA has flights to more than 150
odd destinations. Virgin Atlantic should increase the number of destinations, which
can be done after carefully analysing the facts and figures about the population,
operations, flights of competitors etc.
Also Virgin Atlantic group should focus on developing country (Asia Pacific Region)
as the growth prospects at higher than developed countries. China and India are two
developing countries with highest population and expected compounded growth
rate in this region in 2007-2012 will be 5.2%.

Virgin Atlantic is famous for luxurious flights as it offers world-class facilities to their
passengers but in this competitive environment they are not offering anything price
conscious economy class passengers. They should introduce no frills flight with the
objective of earning profits on economy of scales. With this strategy they will not
only diversify their risk but can potentially capture a new segment using their brand
name and service.

BCG modal of Virgin Atlantic

BCG modal theory divides the product under four specific group, stars, cash cows,
question marks and dogs respectively. Star refers SBU’s with high share or high
growth market. In terms of Virgin Atlantic Airways there is no space in stars, upper
class section is cash cow denotes high share low growth rate. This high end product
targets wealthy customers and business passengers. This is the highest estimate
ticket offered, generally around $9,000, and there are 50 seats available in this class.
Tickets for economy class are priced around $500 and there are 271 seats. Premium
economy targets cheaper flying business class passengers and high-end couples

Stakeholders Analysis

There are different stakeholders for Virgin Atlantic Airways, such as the government which provides
rules and regulations for the organisation and its decision affects the organisation greatly. The
Stakeholder analysis is done here using Mendelow’s Matrix, which will divide the stakeholders
based on the power they possess over the organisation and their interest over the
organisation(Business Information Resources, 2019).
The most powerful and with a higher interest stakeholder are the competitors, employees and
shareholders(Business Information Resources, 2019).

 The competitors who are in the same business and using the same routes can
pose a great influence on the decision-making process of Virgin Atlantic.
Among these competitors, the direct competitors are the ones that fly in the
same routes as VA. There are also lower-cost options like Ryanair and
EasyJet.
 Employees are another important stakeholder who directly benefits from the
organisation and makes a living out of it.
 Shareholders are also a major priority of the business. The shareholders can
directly take part in the decision-making process of the business.

Analysis of the capabilities-VIRO Model:

The VRIO framework by Barney utilizes the use of resources to understand the capabilities an
organisation has.

1. Value: This is connected with the strengths of the SWOT analysis, and asks if the
resources are “efficient enough” to add to the capability of the organisation. The most
valuable resources that Virgin Atlantic has is its human resources, the number of
flights that they have.

2. Rarity: This point out to resources which are rare in the context of the organisational
sector. These rare resources help an organisation to stand out from other
organisations. For Virgin Atlantic, this rare element can be the “fun factor” of the
airlines.
 3. Imitability: Imitability points out to resources which are hard or costly for others in
the field to imitate. Virgin Airlines presents a “fun and innovative” way of flying.
This theme helps them to be hardly imitable by the other competitions.

4. Organisation: This refers to the question that if the company is organized enough to
sustain the aforementioned resources. For Virgin Atlantic, the staff, employees, and
the other shareholders are quite organized for a sustained business environment for
the next three years.

Competitive Strategy Analysis

Segmentation
Market segmentation is a process of dividing the market into groups of

Similar consumer and then selecting the most appropriate group for firm to serve.
This is a concept that is achieved through one of the following six steps 1) firm’s
current situation,2) Determine the consumer wants and needs 3) the division of
markets on relevant dimensions, 4) The develop product positioning, 5) The decide
segmentations strategy, 6) The design marketing mix strategy. The percentage of UK
originate passengers varies from the route to route but then on the average, there is
a 50/40 bias to the UK. Upper Class passengers are predominately. Passengers in the
Premium Economy are there split evenly between the traveling for business most are
the male, average are of age 41. Those who are traveling on business are often doing
the so because their company are operates an economy travel policy. Economy
passengers there are a much broader group so traveling mainly for the leisure,
evenly spread across the most socio-economic groups and age ranges present there.

Targeting
Targeting is the when a firm has chooses one or more of the market segments as the
specific target markets. Virgin Atlantic is a company that is it can considers every
customer to be the upon evaluation of those questions that the company must be
then assess opportunity in the target markets based on the segment size and the
growth potential the competition the companies objectives and feasibility of the
success in this market. Virgin Atlantic has been targeted upper class customers who
are the primarily business passengers traveling on the transatlantic routes. Virgin
Atlantic realized that the opportunity to gain a considerable market share through
effective marketing of their “quality/ fun/ innovative/ honest/ caring airline.
Positioning
Positioning refers to the act of the locating a brand in which customers’ minds over
and against the other products in terms of the product attributes and the benefits
that brand does or does not offer. There are so many of types different general
strategies for the its positioning products present there Attribute that are benefit it
quality and price to use or application, competition the high-tech and the high-touch
and can be an achieve desired positioning. Most significantly these Virgin Atlantic
has an positioned itself as direct the competitor to the British Airways on all routes.
Firstly the Virgin Atlantic was a the extremely aggressive in obtaining slots at
Heathrow International Airport. Virgin Atlantic attracts the customers by being fun
and the innovative. On aircraft Passengers are experiencing spacious setting
arrangements also state of the art in-flight entertainment system was the most
importantly a high level of customer service. In addition to the Virgin Atlantic offers a
distinctive upper class services at business class prices present there. Furthermore the
Virgin Atlantic is installing the Internet capabilities and is implementing Galileo’s
Inside Availability (R), the high-tech inventory management system.

Company Strategy Recommendation

Recommendations:

Virgin Atlantics can sustain its contemporary position in international markets taking different steps
and for this purpose, it has to do analysis time and again in order to assess whether the
implemented competitive strategy is compatible with current business environment or not.
Following are some recommendations which can be used by Virgin Atlantics for sustaining its current
position.

Constant analysis:

Virgin Atlantics should do constant internal and external analysis and amend the strategy or develop
change management strategy according to the market requirements so that it can gain competitive
advantages and beat its potential competitors.

Hybrid strategy:

Though differentiation strategy is ample lucrative for providing sophisticated services and gaining
customer loyalty yet it cannot be determined easily. Moreover, it might give high market share but
market growth is possible only if this strategy is amalgamated with some additional strategy. This
strategy can be cost-leadership strategy or focus strategy.

Competitive prices:

Customers usually prefer exceptional services in affordable prices. So, Virgin Atlantics can gain
advantages from cheap prices as well. Through providing low cost fleets to different customers,
other then the facilitated, this organization could double its profit.

Value added services:

Value added services are often referred to as secondary services which are used for attracting
customers and sustaining their loyalty with organization. No one can deny the significance of Value
added services and marketing and this is the reason why it has remained inseparable part of every
marketing plan and differentiation strategy.

Conclusion:

To conclude, it can be stated that this organization has been cherishing top positions on
international level only because of using differentiation strategy and for this purpose, it has also
invested capital through having partnership with Singapore airline. All its services including multiple
destinations, holiday services, cargo services and in-flight entertainment, demonstrate its successful
usage of differentiation strategy. However, Virgin Atlantics should also keep the advantages and
limitations of using this strategy since there are certain times when this strategy needs slight
amendments or changes in order to deal with contemporary circumstances. Virgin Atlantics can use
different change management strategies in order to cope with limitations of this competitive
strategy. In addition, this organization can also double its profit through taking different steps
including value added marketing, competitive pricing and hybrid strategic development. These add-
ons can maximize its profitability as well as worldwide recognitions and ultimately it would be able
to compete with potential organizations like Emirates and Gulf Air.