Virgin Atlantic - Strategic Audit

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Question: Virgin Atlantic Analysis

Virgin Atlantic

Virgin Atlantic is a relatively young airline, and yet it succeeds to compete quite well on the market.

Using your readings, the Library, and the Internet, and any additional resources necessary, you are being asked to complete the following sections of a Strategic Audit:

1. Analysis of Strategic Factors Since you are aware that your analysis of strategic factors or SFAS (Strategic Factor Analysis Strategy) is based on IFAS and EFAS tables, and since we will need to understand your choices, you are required to submit the three tables in Excel format in one separate file from your word written assignment. No comments are needed on the IFAS and the EFAS tables, but certainly one is needed on the SFAS table that is the main subject of the assignment (You will submit one Excel file that will include three separate sheets, one for the IFAS, one for the EFAS and one for the SFAS). As reminder two files are to be submitted: One Excel file (counting for three pages) and one word file (up to seven pages double spaced).

You will be graded on your knowledge of the software, on your ability to communicate in writing and present your arguments, and on your knowledge of math in building the tables.

2. Strategic Alternatives and Recommended Strategy

Here you will be graded on your ability to analyze economic, social and financial data to justify your available strategies and the one(s) you recommend.

3. Implementation

Describe the implementation of the strategy (ies) you recommended.

4. Evaluation and Control

How do you evaluate the performance of your implementation.

Please consider the following to help you formulate your own response!

Good Luck and have a nice weekend! OTA #105280

Virgin Atlantic is part of the privately-owned Virgin Group. Virgin Group owns a controlling 51% stake in the company, with the remaining 49% owned by Singapore Airlines. Virgin is the second largest long-haul airline in the UK and the third largest European carrier over the North Atlantic.

Virgin's route network has grown to include destinations in the US, Caribbean, Far East, India and Africa; and the company flies approximately four million passengers annually, using a fleet of 29 airplanes, comprising of 13 Boeing 747-400s, nine Airbus A340-300s and seven A340-600s.

The company operates a two class system: upper class and economy class, of which economy class is further segmented into premium economy - consisting of a full fare separate economy cabin, and economy covering all other coach/economy fares. These can be further differentiated with the addition of customizable options such as chauffeur driven cars and clubhouse lounges.

The company's passenger services division arranges check-in facilities, baggage handling, and meal catering and in-flight entertainment. This unit works in conjunction with the special assistance department to help passengers with special travel needs such as special meals or providing mobility aids at departure and arrival airports.

The company has also developed a specialized business unit for cargo transport, and this is offered on all the company's passenger flights. A variety of cargo services are available depending on the size and weight of goods transported.

Virgin also has its Flying Club, a frequent flier program. This rewards frequent fliers with free air miles that can then be used with the airline or some of its partners including Singapore Airlines and South African Airways.
Virgin Atlantic

Market

The airline industry was affected more than most by the tragic events of September 11th 2001. There was an immediate and significant reduction in passenger demand, particularly across the North Atlantic, and a number of airlines became bankrupt. 9/11 was quickly followed by further challenges of SARS and the effects of the Gulf War. The industry is slowly rebuilding passenger confidence and recent traffic figures show signs of a recovery from 9/11. However, it is clear that in order to survive and compete in this challenging environment, it is vital for airline companies to adapt and evolve, focusing on capturing the market with an ever-improving range of services. Airlines with strong brand leadership, like Virgin Atlantic, should be most likely to emerge from the challenge strengthened.

Marketing Objectives

The results of the generation and evaluation of strategic options lead to the definition of market objectives. Two types of objectives have to be considered which help defining the core strategy. These objectives are strategic thrust (future direction of the business) and strategic objectives. Together they define where the business and its products intend to go in future

Considering the facts Virgins future direction of its business is to enter into the existing jeans market by market penetration. Alongside objectives for product and market direction, strategic objectives need to be agreed. This involves the process of planning at the product level. As it is intended to enter an existing market with existing products the determination would have to be the task of being better than the competitors in terms of price, service and supply. This goal could be reached not only by being cheaper than competitors but also much more flexible, to put it in a nutshell, firstly offering the same product for a better price than competitors and secondly offering a closer and better customer service.

Core Strategies

The Target Market

Generally speaking Virgin should attack the ?recession proof" 5 pocket style straight leg blue jeans market, thus competing against brands such as Levi's, Mustang, Pepe Jeans, Lee, Wrangler etc., therefore targeting the average consumer. The core target market will be those jeans that are mainly sold in the department stores and the discount chains. The target is the average customer whereas the most important component is the 5 to 24 year old customers which account for 60% of the total jeans market, especially for Virgin this is an interesting option as this is a similar target group as the customers of the Virgin Mega stores this will be dealt with in more depth later on in this assignment. Expressed more precise referring to a lifestyle analysis the target segments are ranging from modern mainstream, traditional working class, traditional mainstream to upper conservative. It has always been the core of the Virgin philosophy to target an entire already established and rather mature market, in which it is possible to gain a small market share with the high profile of the Virgin brand name. The big market-small share" strategy can be found in most of the Virgin enterprises. A certain market share is not regarded feasible to exceed as this would mean a clash with the Virgin Groups niche market exploitation strategy. Referring to the airline, Virgins flagship, Richard Branson said: 18 jets are expected to operate by the mid 90's, flying some 3m passengers to about a dozen destinations. The temptation to get any bigger must be resisted."

Description

Virgin Atlantic is part of the privately-owned Virgin Group. Virgin Group owns a controlling 51% stake in the company, with the remaining 49% owned by Singapore Airlines. Virgin is the second largest long-haul airline in the UK and the third largest European carrier over the North Atlantic

Virgin's route network has grown to include destinations in the US, Caribbean, Far East, India and Africa; and the company flies approximately four million passengers annually, using a fleet of 29 airplanes, comprising of 13 Boeing 747-400s, nine Airbus A340-300s and seven A340-600s.

The company operates a two class system: upper class and economy class, of which economy class is further segmented into premium economy - consisting of a full fare separate economy cabin, and economy covering all other coach/economy fares. These can be further differentiated with the addition of customizable options such as chauffeur driven cars and clubhouse lounges.

The company's passenger services division arranges check-in facilities, baggage handling, and meal catering and in-flight entertainment. This unit works in conjunction with the special assistance department to help passengers with special travel needs such as special meals or providing mobility aids at departure and arrival ...