Atlantic Business Strategy
The virgin Atlantic airways were founded in the year 1984, the airline has risen greatly to the level of Britain's second largest airline (John, 1990). The airline is part of the renowned virgin group which is Britain's third best brand (Kegan, 2010). The airline operates long distance flights to almost thirty destinations globally (Kegan, 2010). The airline operates flights to destinations ranging from Shanghai china to Las Vegas in the United States. Since its inception, the company has been a very innovative player in the airline industry bringing in new technologies and innovations (Butler, 1998). The company has been introducing new customer service standards. The airline has also been given credit for its exemplary service to customers (Kegan, 2010).
The company has more than 9000 employees and enjoys a consumer base of fifty-three million passengers annually (Kegan, 2010). The company has applied effective business strategies that have enable it to navigate through the competition without any troubles, the company has incorporated other complementary services to the customers including accommodation and land traveling services by use of cars and trains (Kegan, 2010). The airline has also ensured that the quality of the services given to customers is of a high standard so as to eliminate the threat of substitutes; this has greatly assisted the airline in the recent times (Kegan, 2010).
The history of the company is traced back in the year 1982 when Hillary Allan and Fields Randolph too the initiative to start a new company offering services to persons travelling by air the airline was named British Atlantic Airlines and was a replacer of Lakers airways, the main intention of the airline was to conduct flights from the city of London to an Island known as Falkland, due to the shortage of facilities the company founder, Fields decided to conduct flights from London to New York (Kegan, 2010). However, this was rejected in the year 1983. Later Fields met Richard Branson and made an agreement to rename the airline to virgin Atlantic with Fields as the main chairman holding a stake of 25% (The Economist, 2010). In the month of June 1984, the airline operated on its intended route due to the availability of funds to improve the facilities i.e. London, Gatwick to New York using a single plane only (Kegan, 2010). The airline has with time acquired more planes and is now conducting flights to thirty destinations worldwide (The Economist, 2010).
The main environmental issues affecting the virgin Atlantic are economic issuers and competition in the airline industry, the company is also affected by political issues such as deregulation, governmental rules with regard to pricing and also the consumer behavior (The Economist, 2010). The main social aspects affecting the company include terrorist attacks which greatly impacted on the consumer attitude towards the use of air as a travelling means (The Economist, 2010). Just like other institutions, virgin Atlantic operates in an environment with political changes and rules. The airline industry has experienced currently too much political interference and Virgin Atlantic is no exception (The Economist, 2010). The airline has realized many changes caused by political decisions such as the deregulation of the airline industry which greatly reduced government control over the airline industry; this allowed the fare prices in the airline industry to be determined by the forces of demand and supply (The Economist, 2010). However, there have been statutory requirements which the airline had to fulfill such as a third party insurance cover for the passengers incase an accident occurs, the passengers are compensated (The Economist, 2010). The United States department of justice and the European Union are now investigating a price fixing allegation by virgin Atlantic; this is one of the political challenges facing the company (The Economist, 2010).
The company has been affected by prevailing conditions and changes in the economic aspect of life, for example, the recently ended global economic recession which left the airline industry in a very bad position financially, the global economic recession lead to the decrease of the number of people using the air as a travelling mode since they had to look for cheaper means so as to fit to their current economic status (Camilla 2006). The recession which to a great extent affected the continent of Europe and the United States had a negative impact on the revenues generated by the airline (Kegan, 2010). This is because the airline draws most of its customers from the Eurozone (Kegan, 2010). As the study conducted by the Britain chamber of commerce revealed a decrease in the rate of economic growth from 2.6% to 2.3% during the recession (Kegan, 2010).
The economic recession also affected the accommodation sector operated by the airline since many people were trying as much as possible to access goods and services within their economic status and not goods and services that will be costly (Kegan, 2010). Keeping in mind the accommodation sector is comprised of five star hotels, the consumer turn out was very low. (Camilla 2006). The firm is also surrounded by many economic opportunities such as the funds to enable it expand its operations further just like other global airlines, this will to a great extent increase its revenue (Kegan, 2010). The company is experiencing different economic situations with regard to geographical locations, for example the demand for airline and travel services in Asia has greatly increased due to the increase in the amount of economic activities taking place on the continent compared to other continents (Camilla 2006).
Virgin Atlantic is also facing great competition from other airline industry players; the competition is even higher due to the deregulation of the airline industry which reduced the entry barriers to the airline industry (Kegan, 2010). This deregulation has made the profits made by the company to be very unpredictable due to high fluctuation (Kegan, 2010). The competition has also made many major airlines to quit business and even some of the new market entrants fail to survive. Virgin Atlantic has several major competitors including the British airways and the united continental airlines. The social aspect of life is majorly concerned with the cultural beliefs of a given group of persons (Kegan, 2010). Since the company operates worldwide it should be able to operate in each are in a way that syncs with the cultural beliefs of the people living in particular area (Paul, 2000). It is important for the company to maintain cultural practices of the society since it has a very positive impact, not only to the company but to the society at large (Kegan, 2010). Preservation of cultural practices can also be seen as a form of cooperate social responsibility (Paul, 2000). The company is also affected socially by events of terrorist attacks which affect the consumer attitude towards using the air as a means of travelling (Kegan, 2010).
Technologically, the airline has utilized the availability of the internet as an investment ground (The Economist, 2010). This is greatly characterized by the many advertisements and other information placed on the internet concerning the services offered by the company (The Economist, 2010). The company also promotes its products and services through online websites that are commonly visited the consumers (Stevenson, 2010). The airline has also developed also develop their own website which give information about the services that they offer and other activities conducted by the company (Stevenson, 2010). The airline industry also utilizes the current technology by placing their advertisements in movies and using celebrities to market their products and services (Stevenson, 2010). The availability of the internet as a major technology tool has also seen the introduction of online booking services (Stevenson, 2010). These services enable the consumers to book a flight from anywhere in the world without having to physically visit the airline's offices to acquire the travel tickets (Stevenson, 2010).
The use of the internet to advertise products and to offer booking services is a very brilliant since most people these days access the internet, this greatly creates consumer awareness of the products being offered by the airline (The Economist, 2010). The use of online booking services attracts many consumers hence increasing the demand for air travel services (Stevenson, 2010). This is because it helps the customers to cut down on the costs they incur when it comes to booking expenses (The Economist 2010). However, the use of online booking has greatly reduced the use of travel agents (The Economist, 2010).
An internal analysis of the company gives the company's strengths, weaknesses opportunities and weaknesses (Center of Pacific Aviation, 2010). The company has a very strong brand image that has enable it navigate through completion and establish itself in the global market (Center of Pacific Aviation, 2010). The fact that virgin Atlantic is part of the large virgin group that is recognized to be a well managed company with dedicated managers who not only serve the market with new brands but also high quality brands improves the consumers' confidence level on the company (Center of Pacific Aviation, 2010). The company is also enjoying a high number of people using the virgin Atlantic as a means of air transport for cargo and passengers (Center of Pacific Aviation, 2010). The increase in the number of passengers in the travel sector has a positive effect on the number of people using the accommodation facilities hence increasing the revenue (Center of Pacific Aviation, 2010). Apart from a strong brand image and increase in the number of passengers, the company has a good strong asset and capital base (Center of Pacific Aviation, 2010).
The company also keeps on enjoying high revenues throughout its financial periods. However, the company is also faced with many weaknesses. Despite the fact that the company has been enjoying a good financial position and a strong brand image, it has been experiencing a decrease in its market share in the United States, Jamaica, India and china (Center of Pacific Aviation, 2010). This is mainly because due to increased competition from upcoming airlines and already existing firms (Center of Pacific Aviation, 2010). The company is also not in a better position to control the market since it has majored only in thirty locations whereas other competitors have as much 150 destinations worldwide e.g. The British airways and Thai airways, this makes the need to expand the company geographically a factor to consider in the near future. The company also has opportunities which it can exploit so as to increase its market share (Center of Pacific Aviation, 2010). There has been an increase in the number of people travelling by air especially on the continent of Asia (Center of Pacific Aviation, 2010). There has been an increase in the number of passengers travelling by air in Asia due to increased economic activities in countries such as china and India (Center of Pacific Aviation, 2010). Virgin Atlantic as the main carrier for the virgin group has an established market in this area and hence stands a chance to increase the number of passengers using the airline and the accommodation services offered (Center of Pacific Aviation, 2010). Another great opportunity witnessed by virgin Atlantic is their partnership with All Nippon Airlines which has given virgin Atlantic the chance to carry passengers to Japan, this new initiative will enable virgin holidays to expand its services to this new location both travel and accommodation (Center of Pacific Aviation, 2010).
One of the threats which the company is facing is the price fixing scandal. Virgin Atlantic is facing a scandal which not only the consumer confidence in the airline but also the position of the company in its already established markets hence giving room for substitutes (Kegan, 2010). This is because the company is facing an allegation if proved to be true it may have adverse effects on the airline and the virgin group at large (Stevenson, 2010). This is after an investigation on price-fixing was begun by the European Union and the United States department of justice to see whether the allegations that virgin Atlantic was involved are true (Stevenson, 2010). If the allegations are proved to be true, then they will be forced to pay a fine (Stevenson, 2010).This will impact on the financial position of the company (Stevenson, 2010). Another threat being experienced by the virgin holidays is the increase in the cost of fuel which affects the operation costs of the traveling department (Stevenson, 2010).This forces the airline to increase the fare for traveling to different destinations hence decreasing the number of people using the air as a means of traveling due to lack of sufficient funds or the thought that they are being exploited (Stevenson, 2010).In the world, there have been terrorist attacks on airplanes, for example, the events of September 30th 1999 which saw planes get bombed by the unknown terrorist, this inculcated fear into the hearts of people who use airplanes as a mode of transport hence reducing the number of consumers (Stevenson, 2010).
The virgin Atlantic airway has positioned itself in the market in a way that makes the company to be viewed as a new and a very competitive airline in the air travel industry (Center of Pacific Aviation, 2010). The airline applies a strategy which differentiates its position in the market and always giving it the opportunity to acquire new markets so as to boost its market share (Center of Pacific Aviation, 2010). As stated earlier in the essay, the company employs new forms of serving customers in the airline as their major strategy (Center of Pacific Aviation, 2010). The management of the airline ensures that new forms of serving customers are adopted (Center of Pacific Aviation, 2010). The company does this so as to ensure that the consumers view it as an airline operating in sync with the current times and prevailing conditions socially, politically, and economically (Center of Pacific Aviation, 2010). This is very important since the new forms of service delivery enable the customers to use the current technology to access services such as flight booking which has greatly reduced the process of securing an air travel ticket (Center of Pacific Aviation, 2010). At some point, the passengers were forced to contact travel agents so that they could assist them to book flights, therefore the main reason for virgin Atlantic to acquire new operation methods as a business strategy is to ensure that the consumers easily access their services (Center of Pacific Aviation, 2010). The airline also offers complementary services alongside air travel such as accommodation; this puts the company at a good position to attract consumers who intend to travel for holiday reasons (Center of Pacific Aviation, 2010).
The company fosters corporate social responsibility by ensuring that the environment within which they operate within is well conserved so as to ensure that the future generations have a nice place to operate within. The Chief Executive Officer of virgin Atlantic recently announced to offer twenty-five million United States dollars to whoever will assist devise a mechanism that will help the company remove carbon(iv)oxide poisoning from the atmosphere (Center of Pacific Aviation, 2010). This greatly shows the company's dedication towards environmental conservation. The company also ensures that high ethical standards are maintained, the company ensures this by making sure it maintains the standard prescribed by the International Airlines Governing body (Center of Pacific Aviation, 2010). The company also ensures that the employees are not mistreated in any way by ensuring that they not only aim at consumer satisfaction but also ensure that the welfare of their employees is well taken care of. The management of the company also ensures that the persons who have invested in the company get their maximum returns on investment. One of the main shareholders of the company is Richard Branson (Kegan, 2010).