Virgin Australia
Written Group Strategic Case Study
24th May 2012
MNGT2001
Alixandara Sutherland
Laura Tumbers
Katie Horne
Laura Field
Executive Summary
Table of Contents
1. Introduction
2. Strategic analysis
1. External analysis
1. General environment
2. Specific environment
2. Internal analysis
1. Competitive strengths
2. Competitive position in the market
3. Weaknesses
3. Conclusion on organisations competitive position
3. Strategic directions and strategic objectives
1. Vision
2. Mission
3. Strategic objectives
1. Ethics position
2. Stakeholder analysis
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Virgin Australia uses both the prospector strategy and analyser strategy to respond to market turbulence. Turbulence in the domestic airline market, as explained in section 2.1.2 of this report, ranges from moderate to surprising. This environment requires a combination of customer/competitor based and flexible/creative strategic management (Viljoen & Dann, 2003). Virgin Australia achieves this through its application of the prospector strategy, shown in its product development strategy outlined in section 4.1 of this report. This is combined with its use of the analyser strategy, shown in Virgin’s flexible organisational structure and measured approach to risk taking.
11 Porter’s competitive strategies
There are five business level strategies used to establish a competitive position, Porter identifies these as cost leadership, differentiation, focused cost leadership, focused differentiation and integrated cost leadership/differentiation (Hanson, Ireland & Hoskisson, 2011). Virgin Australia historically used an integrated cost leadership and differentiation strategy in its low cost but varied product position in the market (Thomas, 2011). The use of cost leadership strategies is often seen as the only dependable strategy in the airline industry (Thomas, 2011). However the game change strategic goals of Virgins 2011
A. Describe the environment, as viewed by Michael Porter’s model of competitive forces, that Valuejet was trying to compete in. consider competition, suppliers, customers, new entrants, substitute products? The five competitive forces that shape strategy are competition, suppliers, customers, new entrants, substitute products. Michael E. Porter demonstrates how the five competitive forces can be used in any industry. The results from all five forces not only look at the narrow aspect of competition rivals but as well as broader aspect of competitive interaction within an industry. These five competitive forces can also be used in the case of Valuejet. Competition within the airline industry is highly
Virgin Australia which was formerly called Virgin Blue is the Australia’s second largest airline. The airline was started in 2000 by British business tycoon Sir Richard Branson and former Virgin Blue CEO Brett Godfrey. The airlines started as low-cost carrier, but went on to become a “new-world carrier” (Virgin Blue media release, 2011). This low cost airline went on to become a full-service airline by 2012 with the name of Virgin Australia. Since the year 2000 the airlines grew rapidly and posed threat to Qantas airline and over the years Virgin Blue looking at the marketing trends and characteristics of the aviation industry grew into a Full Service Airline and is considered a four star airline by research consultancy firm Skytrax.
The purpose of this report was to provide a strategic evaluation of the company Virgin Australia. The report begins by conducting a strategic analysis of Virgin, including an analysis of the external environment and an internal analysis of competitive strengths and weaknesses. The report then identifies the strategic direction and objectives of Virgin Australia, including the vision, mission, strategic objectives and stakeholders of the company. The report moves on to explore strategic choices of Virgin Australia by identifying the key broad business level and
As we know, Virgin Group is a multi-national conglomerate of the Virgin -branded companies that function globally in various industries. Today, Virgin-branded airlines comprise of: Virgin Atlantic, Virgin Australia, Virgin Galactic and Virgin America. In this analysis we will look at the primary resources and core capabilities of Virgin Atlantic, identify the purposeful areas of the airline’s organization, which primary resources and core capabilities are located and its position to the airline’s business strategy and its objectives. Furthermore, reviewing how each resource and capabilities are organized and reinforced in a way that aligns with the airline’s economic advantages, and what prospects exist to exploit the key capabilities of Virgin
In ‘Competitive Strategy’ Porter introduced the concept of generic strategies – differentiation, cost leadership and focus (Harvard Business Review, 2011). Using these possible alternative strategic positions to analyse AA and AWE, they clearly fall under the focus strategy; neither was a cost leader in their field, nor did they differentiate their product significantly from other Legacy competitors. They both targeted their business model at the whole market of airline travelers, catering to all classes of the market and delivering a similar product.
This research report provides an analysis of two popular airlines in Australia; Jetstar and Virgin Blue, both whom are competing in the airline business. Jetstar and Virgin Blue can both compete and be highly profitable within the business, leisure and family market but however, it will ultimately be the service companies, and their associated marketing strategies and techniques which, will establish the difference between the market ‘leader’ and the market ‘loser’. This analysis will detail potential solutions to a number of major strategic issues confronting the companies to maintain its position and protect its profitability in its core domestic market.
Several strategic models are drawn upon in order to analyse the competitive forces in the industry environment, the macroenvironment, as well as Virgin Blue’s internal environment. Finally, justified strategic responses to the given strategic issues facing Virgin Blue are proposed, including a detailed strategic implementation.
Qantas is the largest Australian airline company. The industry in which Qantas exists seems to be attractive as it brings enormous profits for the company, however, new entrants would face many difficulties in the entering this industry. Qantas uses two-brand growth strategy while offering two types of service: premium and low-price. The premium service is being delivered by the company itself and the low-price service is delivered by subsidiary of Qantas named Jet Star that was established in order to avoid price wars with big competitor Virgin Blue and maintain the Qantas image of being premium services offering company. Qantas uses differentiation
1. Jet Blue´s Business- level strategy; value and cost drivers Jet Blue uses to create and maintain ist competitive position
The goal of a differentiation strategy is to increase the perceived value of goods and services so that customers will pay a higher price for additional features. While the goal of a cost-leadership strategy is to reduce the firm’s cost below that of its competitors. Differentiation strategies can differentiate based on superior quality and unique features, image of prestige. A company that uses differentiation strategy can achieve a competitive advantage as long
Representing approximately 1.2% of the market, Virgin America is a small player in the massive U.S. airline industry. With a fleet size of 53, Virgin America poses little threat in numbers to firms like American Airlines, Delta Air Lines, and United Airlines with their fleets of 954, 719, and 705, respectively. Regardless of Virgin America’s size disadvantages, the firm has a different strategy for success. The firm is not chasing after the largest numbers of passengers and routes. Virgin America regularly wins its customers for its chic service, superior in-flight entertainment options, and contemporary in-flight mood lighting and color
The primary purpose of this report is to demonstrate the decision-making process for the chosen aviation company Virgin Atlantic Airline owned by Sir Richard Branson, which was established in 1984 and how they influence their customers to purchase their products and use their services. Virgin Atlantic offers many services such as
My first and most important goal in undertaking this research assignment is to source, dissect and analyse the low cost strategy model of Ryanair and how they succeed in using this strategy.
In today economics condition, customers are more prefer to buy products or services at lower price but good quality. Therefore, the suitable business level strategy that can be offer by a company such Ryanair Holdings is a low cost business level strategy if it want to reduce number of competitors or no competitors. Low cost business level strategy is a strategy in which a company offers a product or services at lower price in the market to attract customers to buy its products or services. Therefore, Ryanair Holdings need to reduce it cost of operations in order to offer a lower price of services. It is one of the generic marketing strategies that can be adopted by any company. In our opinion, low cost business level strategy can make Ryanair
An organisation bases its strategy according to its environment, and if implemented right will be successful. Firms can target their products by a broad target, thereby covering most of the marketplace, or they can focus on a narrow target in the market (Lynch, 2003). Michael Porter created a generic strategies framework in order for an organisation to gain a competitive advantage in their industry. Porter considers three generic strategies in his framework that an organisation can undertake to gain this advantage. He believes that an organisation falls into either cost leadership (lower cost) or differentiation and once applied in a broad or narrow scope, as discussed by Lynch, creates focus (Figure 1). Furthermore, some organisations undertake in more that one of these strategies and if unsuccessful is called the stuck-in-the-middle strategy. However, if the organisation combines elements of differentiation and elements of low-cost successfully, this becomes and hybrid option and is becoming increasingly popular amongst firms in the modern day.