Strategic Formulation

The world wide operation of Virgin Atlantic Airways made them progressive during the past decades of their operations. Last 2006, they accumulated an increase of about 17% growth rate and their pretax, pre-exceptional performance profit increased from about 20 million pounds to around 42 million pounds (m-travel.com, 2006). Their operation from major destinations of the world made them acquire a strategic market share especially today wherein there are little external threats that might impose negative effects to the whole operation of the airline company, like war, tight government policy, something like that.

SWOT Analysis

SWOT analysis will be used to fully understand the current situation of Virgin Atlantic Airways in the market based from the qualities of their services. This would be helpful in such a way that it gives us the ‘bird’s eye view’ of the company’s position in the market. Through SWOT analysis we can easily determine the key factors that affect the performance of the company. These include the strength, weakness, opportunity and threats. Strength and weakness deals with the internal issues of the company, while opportunity and threats discuses the external factors that affects the company (Echaniz, 2001).

Internal Situation

This would undertake all the issues inside the company that plays vital roles on their development.

Strengths

The following strengths below are the reason behind the success of Virgin Atlantic in it chosen field.

The company is well established and expansive in the international market. This makes Virgin Atlantic Airlines attain impressive growth in the early years of its establishment (Kelner, 2004).

It has a lot of resources that can be use in the expansion of the business through the aid of the ability of Branson, the founder, to raise funds.

Virgin Atlantic has an access to various key “logistical resources”.

Virgin Atlantic has already established its own brand name into the market. This means that their services gain a wide acceptance from their target market.

They appeal to a wider variety of customers, giving them more share in the total market.

They also have talented management team which also serves as their asset since they work efficiently and effectively which brings more contributions to the continuous growth of their company.

Weaknesses

The following are the things that Virgin Atlantic Airlines should be given more attention in order to avoid any losses into the company.

First weakness would be their marketing strategies are mainly focused on the London Market. They should be able to give a little more attention to current markets in the international market for them to be able to expand their market.

Another would be the unproductive exploitation of the alliances and partnerships. This costs them to incur many losses due to the failure to maintain the alliances and partnerships to other companies in the industry.

External Situation

This would undertake all the issues outside the company that plays vital roles on their development.

Opportunities

The following are some of current condition of the market that can serve as a possible chance/ break to the continuous growth and prosperity of the company.

One opportunity would be the impressive growth of the economy of the countries which are markets of Virgin Atlantic Airlines. Because of this, there would be more business trips as part of the regular operations of the businesses from their market as well as the citizens of those countries will now be capable of spending into trips abroad, adding to the market of Virgin Atlantic Airlines.

Latin America, a place for beautiful tourist spots and progressive economy is now currently “terror-free”. This only means that, Virgin Atlantic can now operate at its full force as compared before.

The growth of possible 280 airports within Europe would mean Virgin Atlantic can now start adding more airplane units to accommodate the increasing demand for commercial and cargo planes in the market.

Threats

The following are the possible pressure that should be given more attention and/or must be avoided by Virgin Atlantic Airlines.

External factors like terrorism that causes the decrease in the level of tourists that uses their services.

Another one that could threat the company would be the policies that are being imposed to airline planning to merge or to grow, like for example, the antitrust legislation.

Current supply surplus that imposes a pressure for the revenue to be lower.

Competitive Advantage and/or Competitive Strategy

Even though Virgin Atlantic has a lot of competitors in the market like British Airways, British Midland Airways, United Airline and a lot more, still, they manage to maintain or grow their share to the total markets. The reason behind this is their formation of alliances with other airline companies that would protect their interest in general and at the same time would benefit all of them.

Another reason why I said that Virgin Atlantic has a competitive advantage is their good customer relationship. They are currently experiencing brand loyalty coming from possible and current customers. With this, Virgin Atlantic would be ensuring that they will not go to be loose in terms of the size of the market share as compared to their competitors.

Virgin Atlantic does not just have competitive advantage but also competitive strategies because they were able to implement all their strategic plans. The satisfaction of the strategic plans was made through the aid of their organizational structure which is classified into four principles namely:[1] “encouragement of independence, [2] “long term approach”, [3] “competitive costs levels” and [4] loyal customers” (Kelner, 2004).

In this regard I would go to say that Virgin Atlantic Airlines has both competitive advantage and strategies.

 

Components of Virgin Atlantic Value Chain

One of the current values added to the total “costs” of using the services of Virgin Atlantic planes is the existence of the Radio Frequency ID [RFID] that helps in maintaining and repairing of their aircrafts (ameinfo.com, 2007). The said RFID will be used by the pilot to administer the precise shipment, storage and dispatch of plane parts. This adds to the costs of using the services of Virgin Atlantic Airlines since it is a part of their maintenance costs (interactive-business-communication, 2007   ).

Proposed Solution

Based from the current situation and performance of Virgin Atlantic Airlines, I would recommend that they should take advantage of the booming of the market for traveling abroad. This is a good sign that they should start now increasing the number of their planes and destinations in order to gain the possible customers from other countries.

They should also be innovative to their business operations and to use the full potential of the effective and efficient management team that the company has. They should be aggressive in expanding their operation now due to the increase in the number of possible market by the start of the year.

With regards to the merging and alliance issue, I have nothing against it. But Virgin Atlantic should monitor from time to time if it would be better to work in the market alone than with having other companies to work with. If Virgin could stand now on its own feet, then, there is no more reason for the company to stick with the alliance and merging. But if it is the other one, then, maximize the benefits that can be derived from the merging and formation of alliance and aim to stand from your own feet in the near future.

 

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