Virgin Atlantic SWOT, PESTLE and BCG Analysis

virginal Atlantic SWOT, PESTLE and BCG synopsisJump to BCG Matrix PESTLE psycho epitome of thoroughgoing(a) Atlantic Porters 5 Forces compendium Ansoff Matrix SWOT perfumemary of complete(a) AtlanticThe vestal Atlantic Airways is a UK- found insular foreign(a) flight path stage air that started operation in 1984. Flying up to 35 destinations in North America, Asia and Africa, it is 51% owned by virginal Group and 49% owned by Singapore Airlines (Wikipedia). Its go across size is 37 (31 in swan) It competes with opposite local and international airlines including British Airways, the biggest and leading in UK. In the year to February 2009, pure(a) Atlantic carried 5.77 million passengers and made an annual kale of68.4 million on turn everyplace of 2,580 million.2). With this information, it suggests libertines bright rising and industry fairly sh atomic number 18 of the grocery. However, extraneous and industry environment abbreviation is a sustained r un (Hitt, Hoskisson Ireland 2003) that every now and then makes prediction and prepargondness an inviolate tell apart of strategicalal actions of debaucheds to efficiently manage opportunities and threats outside its organization.Today, the pure(a) Atlantic is wholeness of the worlds virtuall(a)y jazzd brands and organism recognized and trusted through with(predicate) with(predicate) their winning awards for their harvests and innovative marketplaceing ( 2008).Internal surroundingsResource analyze/Value concatenationPortfolio Analysis kernel competenciesbCG matrixStakeholder AnalysisOrganisational farming/Structure pecuniary AnalysisResource Audit/Value Chain(8500 stave worldwid)The resource audit identifies the resources available to a n ace sector. Some of these gutter be owned (e.g. plant and machinery, trademarks, retail outlets) whereas other resources deal be obtained through coalitions, joint ventures or simply supplier arrangements with other tunees whilleValue Chain Analysis describes the activities that take place in a line of reasoning and relates them to an analytic thinking of the competitive strength of the problem. Influential work by Michael Porter suggested that the activities of a course could be grouped to a sm yeter place two headings (1) Primary Activities those that argon directly c erstwhilerned with creating and delivering a overlap (e.g. comp integritynt assembly) and (2) Support Activities, which whilst they argon not directly involved in production, may increase potency or efficiency (e.g. human resource management). It is r ar for a business to undertake each(prenominal) primary and support activities. Value Chain Analysis is one way of learning which activities be best undertaken by a business and which be best provided by others (outsourced)Core Competence AnalysisCore competencies atomic number 18 those capabilities that are critical to a business achieving competitive advantage. The off hardened point for analysing core competencies is recognising that competition surrounded by businesses is as much a race for competence mastery as it is for market position and market power. Senior management potentiometernot focus on all activities of a business and the competencies compulsory to undertake them. So the goal is for management to focus guardianship on competencies that really take up competitive advantagePerformance AnalysisThe resource audit, value chain abridgment and core competence analysis help to define the strategic capabilities of a business. After completing such(prenominal) analysis, principals that can be asked that evaluate the overall movement of the business. These questions includeHow save the resources deployed in the business heightend over time this is historical analysisHow do the resources and capabilities of the business compare with others in the industry -industry norm analysisHow do the resources and capabilities of the business co mpare with best-in- curriculum wherever that is to be found-benchmarkingHow has the financial performance of the business changed over time and how does it compare with key competitors and the industry as a whole? Ratio analysis.Portfolio AnalysisPortfolio analysis is defined in the merchandise Management Text as the aid tomarketing managers to help make grow effective marketing plans. Portfolio models are subprogramdto mannikin of actionify strategic art Units (SBUs) to de bourneine the future cash charactersthat can be expected for severally SBU as healthy as the future resource requirement that from from each one onewill require. Portfolio models generally examine the competitive position of the SBUand the destinys for improving the SBUs contri scarcelyion to profitability and cash f small.The model we will be using for stark(a) is the Boston Consulting Group (BCG) model.This model is based on the relationship between relative market share and addition of theMark et The BCG model classifies products under four areas. These are stars, cash cows,question marks and dogs. Stars are SBUs with elevated share or high growth market virtuous Atlantic is clearly the cash cow of the unadulterated Empire but we set near undertaken a Portfolio analysis from the viewpoint of perfect(a) Atlantic. With regards to Virgin Atlantic Airways we swear that at that place is no star. The cash cow is the Upper crime syndicate section. hard currency cows sacrifice high share of a unkept growth market and generate higher(prenominal) cash r level offues. This high end product targets wealthy clients and business passengers. This is the highest damageing ticket available, usually approximately $9,000, and at that place are 50 seats available in this class. on that pointfore, upper class generates much higher revenues compared to premium economy and economy. Dogs are SBUs that accept low market share in low growth market. We operate Virgin Atlantics eco nomy class as a dog. Question marks are SBUs that squander high potential but will require commodious resources to build market share. We believe that amplitude Economy is a question mark as it has potential to be a cash generator. Premium economy targets cheaper dissipated business class passengers and high end couples. There are 38 seats in this class and tickets generally swop for around $3,000. Economy class focuses on families and groups zaping together. Tickets for economy class are scathed around $500 and there are 271 seats.BCG MatrixVirgin CultureVirgin Atlantic is a unique airline with large nifty deal and has a unique culture and it is not easy to sum up our culture in just a few words. Ours is a holding and fast changing business and every one of our stack has to have the intelligence to plan and deliver brilliant airline operations, to think on their feet and be accountable and respond to change and development. All the while, of course, we are all working h ard to deliver our unique mix of product and overhaul for which we are famous. All this creates a lively, collaborative environment where everyone knows whats expected of them and whole caboodle together to achieve it. We pride ourselves on being as sightly and unpretentious as we are inspired and professional everyone has a chance to voice their opinions and no ones too proud to ask questions. We embrace launching wherever it comes from. If someone, an pursueee, customer or passenger has a brainwave well listen. If we like it well do it and this is another way in which our people are the driving force behind our advantage.Of course, it takes a certain screen of person to flourish in such a fast- stepd, freethinking environment. Talented, self-motivated, enthusiastic, youll have to share in our passion for providing only the very best. Put people like this together, and you create a winning performance culture that thrives on inspirational leadership, positive attitudes, commercial flair and underpinned by solid accountability.Financial AnalysisVirgin Atlantic has managed a pretax profit of 41.6 million pound sterlings ($76.1 million) on record annual sales of 1.91 billion.The carrier shared that a spring in business class travel helped more than 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.Virgins results contract comes after reports that it was Virgin that blew the whistle on British Airways which is now being investigated by the UKs Office of Fair Trading (OFT) and the US Department of arbitrator 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.Chie f 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 raise souse like BAs, 70 on a round-trip ticket to bolster revenues. The fuel nobble has not kept pace with the increased cost of fuel, he reportedly said. It has only enabled us to find out 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 uniform surcharge of pound stg. 35 ($87) per individual long-haul flight (pound stg. 70 for a call in 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 right away 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 calendar 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 in April. The Office of Fair Trading said last week that the investigation was at a very early stage and that there should be no assumption that there had been any wrongdoing.The External EnvironmentPESTLE AnalysisPESTLE analysis if you are including legal and environmental.Airlines are a good one because so more variant things meet them.Political Taxes that they get charged in different countries for l anding, fuel taxation etcEconomic e.g. How does inte sopor rate movement affext their longterm debt? How as their economic performance compared to the market sector? P/E ratios etc. Oil prices increasing, is this bear upon their profits from increased fuel costs?Social Safety measures they employ on board and on the ground. Polulations growth does an ageing poulation affect them i.e. bilk boomers, lots of people in that lifestage have more disposable income to spend. technological As things improve technology becomes cheaper. How does this affect them? Does this mean the entries to barrier are lower for competitors to join? Do easyjet have a big RD dept? reasoned Different legalities of different countries some stricter than othersEnvironment carbon offsetting, what is their CSR policy?The effort Environment Five ForcesNew entrants in the industry basically heart two difficulties barriers to entry and retaliation from present heartys (2003) In the aviation industry, i n particular the service passenger-based ones like Virgin Atlantic Airways, in modern economies are privately-operated that calls for potent financial requirements at the fore. Since travel services are derived demand (), crude entrants should be able to cut a share in the pie in the presently saturated market. This endeavor could result to another substantial resource to be deployed. However, with such new entrant engagement, it does not ratify of intended results because competitors like Virgin already created strategic links to other country-routes including its alliance with Asian giant Singapore Airlines that makes it easy to create counter-dodge.Boeing, the largest maker of jetliners and supplier of Virgins aircrafts, had recently signed long-term agreement with largest aerospace parts allocator Satair for an Integrated Materials Management (). As a result, Boeing could reduce its inventory and belittle warehousing costs because spare parts will be provided only when req uireed. A cost reduction strategy from a supplier can assure customers like Virgin of price management scheme, if not, its another supplier, Airbus (the once number one airline manufacturer) could be resorted.Competitors in the industry have the same capability in price interactivity of their web pages like Virgin. This is back up almost fifty percent prevalence of internet connection among UK market, not to mention other countries. As a result, the power of buyers to gain get to to prices and services of firms increase making them knowledgeable of distinction of one from the other. Companies on their part are obliged to be more competitive oddly in maintaining and updating their web sites.The countrys sea transport industry had demonstrable super ferries while the 2003 recorded 17.4% increase of UK passengers who took cruise holidays that reached nearly one million in that year (). This development would make sense to airline industry tourism and leisure market e redundantly f oreigners that like to see the national endowments. With demand for airline transport rise at high-speed rate than supply for it, the airline industry is required to effectively apportion its resources in a manner that exploit this supply shortage. Other airline competitors in the likes of AMR Corp., British Airways and Lufthansa are operating in at to the lowest degree 150 destinations compared to Virgins 20 As a result, rivalry among these firms against Virgin is comparatively insignificant although strategic actions of Virgin that directly and significantly threat their market could spark retaliation in the detriment of comparatively small firm. The firm should focus in its target market and avoid competing with these large firms.Ansoffs product / market matrixIntroductionThe Ansoff Growth matrix is a scape that helps businesses decide their product and market growth strategy.Ansoffs product/market growth matrix suggests that a business attempts to grow depend on whether it m arketsnew or outlastingproducts innew or existing markets.The sidetrack from the Ansoff product/market matrix is a series of suggested growth strategies that set the direction for the business strategy.What is a censorious Success Factor? diminutive Success Factors(CSFs) are the critical instruments or activities required for ensuring the success your business. The term was initially used in the world of data analysis, and business analysis.( attracting customers managing its fleet managing its people, and managing its finances)Most smaller and more pragmatic businesses can still use CSFs but we need to take a different, more pragmatic approach.Critical Success Factorshave been used significantly to present or identify a few key factors that organizations should focus on to be successful.As a definition, critical success factors refer to the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department, or org anization.The connection of the Virgin Airline is outrageous because of the media that serves as a gigantic market competency advantage. Their strategy is using the media such as television, radio, internet, and even newspaper gave the business an opportunity for promotion.KEY POINTSVirgin Atlantic constituted the strategy in promotion. They need to communicate with their customers for their initiatives in offering special offers that effectively make an appeal to their customersThe benefits are expected to gain the Airlines 3-month retribution on their investment can utilize the advantage of the confederacy over the technology such as computers lowering the costs of the promotional materials because of the fundamental interaction of the business in the different forms of media prioritizing the communication to the customers and having the complete control on the advertising campaignsThe Virgin Atlantic recently tested the establishment and can continuously apply this in all th eir system. This strategy deals with the climate change has a great impact in the national operation of the business such as the investment in the excess technology, better flying planes, building and operating an efficient infrastructure, and positive economic arrangements. systemIs about to design a desired future and identifying ways to bring it about by stenier1979.a strategy is the pattern or plan integrate an face s major goals polices and actions into a cohesive whole.Strategic PlanningStrategy is thedirectionandscopeof an governance over thelong-termwhich achieves advantagefor the organisation through its configuration ofresourceswithin a challenging environment, to meet the involve ofmarketsand to fulfilstakeholderexpectations.In other words, strategy is about* Where is the business attempt to get to in the long-term (direction)* Which markets should a business compete in and what kind of activities are involved in such markets? (marketsscope)* How can the business per form better than the competition in those markets? (advantage)?* What resources (skills, assets, finance, relationships, technical competence, facilities) are required in do to be able to compete? (resources)?* What extraneous, environmental factors affect the businesses ability to compete? (environment)?* What are the values and expectations of those who have power in and around the business? (stakeholders)Strategy at Different Levels of a contrast(Safety,securityandconsistent deliveryof the basics are the foundation of everything we do.The success of our three year strategy requires us to build on these foundations by focusing on thebusinessandleisuremarkets and drivingefficiencyandeffectiveness.)Strategies exist at several levels in any organisation ranging from the overall business (or group of businesses) through to individuals working in it.Corporate Strategy is relate with the overall purpose and scope of the business to meet stakeholder expectations. This is a all-impor tant(a) level since it is heavily influenced by investors in the business and acts to guide strategic stopping point-making throughout the business. Corporate strategy is often stated explicitly in a mission statement.Business Unit Strategy is concerned more with how a business competes successfully in a particular market. It concerns strategic decisions about choice of products, meeting needs of customers, gaining advantage over competitors, exploiting or creating new opportunities etc. functional Strategy is concerned with how each part of the business is organised to deliver the corporate and business-unit level strategic direction. Operational strategy therefore focuses on issues of resources, processes, people etc.How Strategy is Managed Strategic ManagementIn its broadest sense, strategic management is about taking strategic decisions decisions that answer the questions above.In practice, a thorough strategic management process has three main components, shown in the figure belowMission narrativeTo grow a profitable airline that people love to fly and where people love toWork.SWOT AnalysisThe next instalment of reviewing a firms strategic plan is to perform a SWOT analysis. This entails identifying a firms internal strengths and weaknesses and their external opportunities and threats. After analyzing the external environment and internal resources, strategic decision makers have the information they need to formulate corporate, business, and financial strategies of the organization. A similarity of strengths, weaknesses, opportunities, and threats is normally referred to as a SWOT analysis. A SWOT analysis helps executives summarize the major facts and forecasts derived from the external and internal analysis. From this, executives can derive a series of statements that identify the primary and secondary strategic issues confronting the organization. Strategy manifestation builds on SWOT analysis to utilize strengths of the organization in order t o capitalize on opportunities, counteract threats, and alleviate internal weaknesses. In short, strategy formulation moves from simply analysis to devising a coherent course of action. The findings of a SWOT analysis are the basis for developing objectives and strategies that can be implemented in a phoners strategic plan. Therefore, it is important for companies to expand to perform SWOT analyses, because external and internal factors affecting companies are everlastingly changing. New strategies need to be developed and old ones need to be revised in order to reflect the current internal and external conditions that affect a attach to Internal strengths and weaknesses are activities that a company performs particularly well or poorly. These internal activities stem from all departments and components of a business. After a company identifies its strengths and weaknesses, it should then develop strategies that capitalize on its strengths and minimize or improve its weaknesses E xternal opportunities and threats are events that occur outside of the company and are events that the company has no control over. Companies benefit from external opportunities and are harmed by external threats. It is important for a company to recognize its external opportunities and threats so it can formulate strategies to take advantage of future opportunities and to avoid future threats.(S)trengthsVirgin Brand recognized by 98% of British Public.Clients expect good customer service in each separate class Business/Economy.Virgin Atlantic introduced innovative technology including in flight music, icecream, games, and movies.New in flight innovation is offered to gold club holders or J-class with loungesoffering quality food and comfort. tone of voice trained employees recruited from other airlines.Virgin Atlantic is spawned from as a private company allowing for other Virginbrands and more control.Richard Bransons innovative entrepreneurial management. matched pricing for busi ness class offers more services.Partnership with Singapore airlines because they are the minority shareholder at49%. The reason why this partnership is beneficial is because their routes arenon-overlapping and the partnership allows the transfer of core competencies.Load factor is better than competition therefore, returns are higher and value isgreater.Positive publicity, in regards to winning every quality award known to man.(W)eaknessesFlight delays need to improve flight efficiency.The travel routes are limited.Hot Air pickup separate from traditional airline advertising magazinesincluding articles and marketing advertising.Cut routes to Chicago, Toronto, and drape in relation to the September 11 tragedy.Late getting on the Internet Missed the Boat for web site, web page, and ecommerce.Richard Branson is a one man manager being the owner and director of multiple companies.cost associated in the overhead of keeping two five star chefs, lounge, and limo service.Virgins reliance on Trans Atlantic traffic makes them more vulnerable to the throw away in demand for travel to and from the U.S.(O)pportunitiesStrategic Marketing above the rest utilizing by being innovative, fun, maintainingvalues, caring, and produce quality.Technology adds improvements (Galileo) an advanced inventory system.In flight Internet connection.Web site needs to be better possible weakness for e-commerce and regularweb site navigation.Generate additional routes.Virgin Galactic, we are flying into outer space.Warehouse facility -Heathrow, London. respite may be an unexpected opportunity for investment.On-line strategy in targeting branding and ongoing ad campaigns, through on-linemedia planning and get account.(T)hreatsRecession, September 11th will and has affected the entire airline industry, order cancellations, peril aversion for flying customersBrand Dilution by a quick expanding brand image may be too global and notfocussed towards the important products.Competition for routes British and United.Fuel prices are fluctuating, which accounts for 15% of total airline expense.ObjectivesThe results that an organization seeks over a multiyear period are its long-termobjectives. Such objectives typically involve some or all of the following areasprofitability, return on investment, competitive position, technological leadership,productivity, employee relations, public responsibility, and employee development.Eric Starks, Virgin Atlantic Regional Director, stated the following objective Tomaintain a safe customer environment through the necessary security procedures. to a fault toconcentrate on core competencies by consolidating routes, directly related to lay offworkforce, to remain profitable while targeting business class passengers.StrategiesStrategies are statements of how objectives are to be achieved. These are usually long- term strategies and necessitate many different approaches, such as, product development, joint ventures and strategic alliances. Gene ric strategies such as low cost, differentiation, or focus strategies characterize the competitive orientation of the firm in the marketplace.In order to remain profitable Virgin Atlantic has focused on its core competencies. The company is presently focusing its strategies on sustaining great quality. service and maintaining relationships with their Upper Class customers. This has resulted in the closing of routes to Toronto, Chicago, and Cape Town. The company has also reduced the amount of flights a day and personnel by 20% per route across the North Atlantic. For example, the San Francisco routes were reduced from two flights to one flight per day.Competitive Strategy AnalysisSegmentationMarket air division is defined as the process of dividing a market into groups ofsimilar consumer and selecting the most appropriate group(s) for the firm to serve. Thisconcept is achieved through the following six locomoteDefine firms current situation.Determine consumer wants and needs.Divi de markets on relevant dimensions. civilise product positioning.Decide segmentations strategy.Design marketing mix strategy.TargetingTargeting is when a firm chooses one or more market segments as a proper(postnominal) target markets. Virgin Atlantic is a company that considers every customer to be important and thus offers individualized services to customers. These are baseball club basic criteria for targetingWho buys our product?Who does not buy our product?What need or function does our product serve?What problem does our product solve?What are customers currently buying to satisfy the need or solve the problem forwhich our product is targeting?What price are they paying for the product they are currently buying?When is our product purchased?Where is our product purchased?Why is our product purchased?Upon evaluation of these questions the company must then assess opportunity in target markets based on segment size and growth potential, competition, companys objectives and fea sibility of success in this market. Virgin Atlantic has targeted upper class customers who are primarily business passengers traveling on transatlantic routes.PositioningPositioning refers to the act of berth a brand in customers minds over and against other products in terms of product attributes and benefits that the brand does or does not offer.38 There are many different general strategies for positioning products Attribute or benefit, quality and price, use or application, competition, hi-tech and high-touch, can achieve desired positioning. Most significantly, Virgin Atlantic has positioned itself as direct competitor to British Airways on all routes. Firstly, Virgin Atlantic was extremely aggressive in obtaining slots at Heathrow supranational Airport. Secondly, Virgin Atlantic attacked the proposed British Airways and American Airlines partnership stating that it was unhealthy for competition. Finally, Virgin Atlantic has strived to compete with British Airways on all rou tes into and out of London. Virgin Atlantic attracts customers by being fun and innovative. On the aircraft passengers experience co bolshyal setting arrangements, state of the art in-flight entertainment system, and most importantly a high level of customer service. In addition,Virgin Atlantic offers a distinctive upper class service at business class prices.Furthermore, Virgin Atlantic is installing Internet capabilities and is implementing Galileos Inside Availability (R), a high-tech inventory management system. excerpt one low price/low added value.likely to be segment specific. plectron two low price.risk of price war and low margins/need to be a cost leader.Option three Hybrid.low cost base and reinvestment in low price and differentiation.Option four Differentiation.(a)without a price premium sensed added value by user, yielding market share benefits.(b)with a price premiumperceived added value sufficient to to bear price premium.Option five focussed differentiation.p erceived added value to a particular segment warranting a premium price.Option six increased price/standard.higher margins if competitors do not value follow/risk of losing market share.Option seven increased price/low values.only feasible in a monopoly situation.Option eight low value/standard price.loss of market share.ConclusionBy studying this external and industry analysis on environmental facts, it could be said that Virgin Atlantic Airways is primed(p) in standard cycle markets wherein its competitive advantage is moderately shield from imitation. In general, airline industry belongs to slow cycle markets, however, due to relatively smaller capital and operations of some firms like Virgin, compa