Table of Contents
1.0 Introduction. 2
2.0 Virgin Atlantic Value Proposition. 2
3.0 Virgin Atlantic Competitive Advantage. 3
4.0 Porter’s 5 Forces. 4
4.1 Threat of New Entry. 5
4.2 The power of Buyers. 5
5.0 Competitive rivalry and the threat of substitute services. 5
6.0 Conclusion. 6
7.0 Bibliography. 7
The Virgin Atlantic Airways is one of the famous travelling Companies that has redefined tourism experience in the travel industry worldwide. The travel organization (Virgin Atlantic) has been developing unique business strategies since its launch in 1984 with the aim of revolutionizing consumer experience in the airline industry (Virgin Atlantic 2015). In addition to that, Virgin Atlantic business is the United Kingdom’s second largest airline after the British Airways whose sole objective is to provide travelling services to different destinations worldwide. The primary mission of Virgin Atlantic is to “embrace the human spirit and let it fly” (Virgin Atlantic 2015). On the same note, the Company’s vision is to satisfy consumers’ potential demands and make their travelling experience safe/comfortable as well as setting standards for other airlines in the industry.
The Virgin Atlantic Company has been a key pioneer of customer innovation through its use of design, promotional activities, and services. In particular, the Virgin Atlantic Company has been using innovation as a critical part of its successful strategic approach. The Virgin Atlantic organization has adapted to different strategies that are responsible for its concurrent market position. For instance, Virgin Atlantic was the first airline company to have televisions in all classes, offer super economy services, have drive-thru check-ins, utilize biofuels, have arrival lounges, have at-seat podcasting, and even allow SMS texting/mobile connectivity on board (Virgin Atlantic 2015). This critical analysis report will focus on demonstrating the strategic direction of the Virgin Atlantic air travel organization.
The core values promoted by the Virgin Atlantic Company are reflected by the primary values under the Virgin brand umbrella including fun, innovation, quality, value for money, as well as a sense of a competitive advantage. As depicted in the Virgin Atlantic website, the Virgin Atlantic core Founder: Richard Branson, signed a pact in the year 1999 to sell about 49 percent of the company’s stake to Singapore Airlines with an aim of forming a distinct global partnership (Virgin Atlantic 2015). The bold move of selling almost a half of the company is seen as a strategy to develop the Virgin Atlantic brand into a manageable and successful brand. Concurrently, Virgin Atlantic operates its flights from London Heathrow to different destinations around the globe including Washington, New York, Cape Town, Delhi, Nairobi, Kingston, Cuba, Orlando, Sydney, Mauritius, among others. Particularly, Virgin Atlantic’s strategic concept is based on the company’s innovative service development for new in-flight innovations. For example, the in-built TVs and podcast systems in the Virgin Atlantic seats demonstrate the kind of innovation that aims at providing unique travelling experience through appealing entertainment. Specifically, Virgin Atlantic Company has incorporated diverse the latest blockbusters and games as part of its in-flight entertainment portfolio to improve travelling experience.
Moreover, Virgin Atlantic is known for making joint ventures with other airlines and relevant organizations with an aim of improving its market position in the international platform. In that case, the Virgin Atlantic Cooperation has linked with the major market players like five/six-star hotels in different parts of the world to form flying clubs, which offer exclusive promotions and support services to consumers. Especially, the Flying clubs are a critical part of the Virgin Atlantic’s strategy to maintain customer loyalty while expanding into different market segments around the world.
Concurrently, the Virgin Atlantic Company has concentrated on the maintenance of customer relations, especially with the upper-class clients, and sustaining the strategy of high-quality services. In particular, the Virgin Atlantic company is encouraging its consumers to upgrade their services to upper class to enjoy diverse innovative experiences such as fully flat beds, award-winning clubhouses (with appealing offers) as well as chauffeur driven transfers. As such, Virgin Atlantic’s value proposition and its market position are depicted in its distinct, innovative strategies.
Virgin Atlantic Airways Company has many competitive advantages that are responsible for its remarkable success in this 21st century. As suggested by Topham (2015), for example, the company has a well-established, strong brand name that is respected by over 98 percent of the British public. Furthermore, the Virgin Atlantic’s introduction of in-flight innovative technologies like TVs, movies, games and music is well-matched by trained workers and a stable organizational structure (Lampikoski, Westerlund, Rajala, and Möller 2014). Besides, the company’s strategic formation of alliances/partnerships with the major market players such as Singapore Airlines play a significant role in enhancing Virgin Atlantic’s global market position (Heracleous and Wirtz 2012). Specifically, the Virgin Atlantic-Singapore airlines partnership has helped the Virgin Atlantic Airways in cutting its operation costs significantly to stay profitable in the travel industry (CAPA 2013).
Still, Virgin Atlantic’s strategic mergers and alliances enable the company to attain additional routes in various market segments across the world, hence providing the company with suitable market expansion opportunities. Notably, Virgin Atlantic’s core Founder: Richard Branson has innovative entrepreneurial management skills that help in boosting the success of the organization (Aaker and Joachimsthaler 2012). Ultimately, Virgin Atlantic’s service prices are much consumer-friendly as compared to British Airways’ prices, thus, placing the organization in a better competitive position.
The Porter’s five forces is an important tool in the analysis of different business situations. Notably, the Porter’s five forces will facilitate the understanding of both the strengths and weaknesses of the Virgin Atlantic’s present competitive position. Under porter’s Power of Suppliers, Virgin Atlantic Airways has Airbus and Boeing as their primary aircraft suppliers. On the other hand, Lanza Tech is the main Virgin Atlantic’s fuel supplier. In particular, both Virgin Atlantic’s fuel and aircraft suppliers produce quality products that are up to the global environmental standards, a fact that gives the Virgin Atlantic company extra credibility as market leaders (Notis 2015). As a result, Virgin Atlantic’s suppliers play a significant role in driving the company’s sustainability in the air travel industry (Virgin Atalntic 2012).
4.1 Threat of New Entry
The airline industry is a flooded industry with many airlines designed for similar purposes. However, following Virgin Atlantic’s partnership with popular airline brands like the Singapore carrier and its remarkable background (as a Virgin brand), entry into new market segments is not a critical concern as it is for other airline brands like Easy Jet (with weak background). Particularly, Virgin Atlantic’s investment in higher fixed costs in its market segments hinder competitors from other market segments from staging competition against them.
4.2 The power of Buyers
The Virgin Atlantic Company is known for quality service provision for their consumers because of their innovative/value-oriented strategies. Notably Virgin Atlantic Airways ensure that their consumers can afford and access air tickets through various platforms like the internet, without the help of agents. As discussed by Nhuta (2012), Virgin Atlantic’s blue promotional package is an example of a strategic price offer that attracts customers who are sensitive to air travel fares. Particularly, the company has various distribution channels that are user-friendly regarding their ability to bargain for air tickets.
Virgin Atlantic Company’s strategies and the provision of unique services that are highly differentiated through innovation, makes the company’s operations immune from stiff competitive rivalry and substitute services. The Organization’s exclusive offers and distinct in-flight experiences characterized by innovative entertainment and attractive promotional activities wages off competition or any potential replacement service.
The Virgin Atlantic Company focus on the upper and the premium level consumers is a key differentiating factor that demonstrates the uniqueness of the services it provides (Carter 2013). In particular, British Airways poses a substantial substitute and rivalry threat because of its number one market position in the United Kingdom market. In that case, the Virgin Atlantic company should strive to differentiate its services from the British Airways’ services to reduce the degree of competitive rivalry and the threat of substitution, especially in the U.K market.
The Virgin Atlantic Airways has remarkable strategies that play critical roles in driving the company towards its ultimate market leadership objective. Particularly, the airline company’s strategic concept is based on the innovative service development for new in-flight innovations and the attainment of brand differentiation through extensive value-addition on upper/premium classes. For instance, Virgin Atlantic Company is carrying out extensive promotional activities in different media platform to encourage its consumer to upgrade to upper and premium levels, which has iconic/innovative travel experiences. In that case, the Virgin Atlantic organization has been able to reduce the risk of substitute services and the pressure from rivalry companies such as British Airways.
Moreover, the company’s suppliers of aircraft and fuel provide quality products that enhance the sustainability of the company in the airline travel industry. Besides, Virgin Atlantic has ensured that their buyers can access air tickets at affordable prices, thus enhancing repeated buying through consumers’ bargaining power. Nonetheless, the Virgin Atlantic company ought to continue differentiating its services from the British Airways’ services to reduce the degree of competitive rivalry and the threat of replacement, especially in the United Kingdom market.
Aaker, DA and Joachimsthaler, E, 2012, Brand leadership. Simon and Schuster.
CAPA. 2013, Virgin Atlantic Airways’ track record of losses: partnerships should help. Cost cutting would. Available at: http://www.virgin-atlantic-airways-track- record-of-losses-partnerships-should-help-cost-cutting-would-129215.
Carter, J, 2013, Marketing Plan Example: Virgin Atlantic Little Red. GRIN Verlag.
Heracleous, L and Wirtz, J, 2012, Strategy and organisation at Singapore Airlines: achieving sustainable advantage through dual strategy. In Energy, Transport, & the Environment (pp. 479-493). Springer London.
Lampikoski, T, Westerlund, M, Rajala, R and Möller, K, 2014, Green Innovation Games. California Management Review, 57(1), pp.88-116.
Nhuta, S, 2012, An analysis of the forces that determine the competitive intensity in the airline industry and the implications for strategy. International Journal of Physical and Social Sciences, 2(9), pp.433-469.
Notis, I, 2015, Virgin Atlantic Airways: A Look Inside the Airline’s Green Initiatives.
Topham, G 2015, Virgin Atlantic soars back into profit. Available from: http://www.theguardian.com/business/2015/mar/10/virgin-atlantic-soars-back-into-profit
Virgin Atlantic, 2012, Sustainability report. Available at: http://www.virgin-atlantic.com/content/dam/VAA/Documents/sustainabilitypdf/fullsustainabilityreport.pdf
Virgin Atlantic, 2015, Virgin experience. Available at: http://www.virgin-atlantic.com/gb/en/the-virgin-experience.html
