Virgin Atlantic - Business Audit, Management Structure, and Ways to Enhance Position - Case Study Example

? Business Strategy Business-Virgin Atlantic Virgin Atlantic is an airline business whose base is in Crawley, West Sussex, England. The airline is part of the wider Virgin Group owned by Richard Branson. Branson had fully owned the airline business until 2000 when he agreed to sell 49% of the business to Singapore Airlines who were to pump additional capital to ensure Virgin Atlantic’s competiveness. Currently, Virgin Atlantic is the second largest long haul airline in the UK. However, things have not always been rosy for the business which was started on 1984; they were faced with absolute competition by British Airways. At the time of Virgin’s Atlantic inception, British Airways was looked upon as the airline of choice for most England and European flyers. Virgin Atlantic customers mainly vary dependent on the operational routes. However, statistics have showed that the bulk of their customers come from the UK. The distribution of the UK customers is approximated to be 60% and the rest is constituted by worldwide customers. The business has categorized its customers dependent on the class they fly. It has the smallest group of customers under Upper Class passengers who are mainly business persons aged 35-45. The second group of customers flies under Premium Economy; customers flying here are fairly split between business and leisure flyers. The last grouping is the Economy passengers who constitutes the largest grouping of the Virgin customers and encompasses flyers from most socio economic groups (Tillmann 235). The leisure and business travelers remain the target customers for the airline business. Virgin Atlantic has, since inception, aimed to run a profitable airline that people love to fly as well as being a competitive employer. It has cultured its objective to include the three main stakeholders who are the business shareholders/owners, its customers and its employees. Therefore, given this primary objective, it is safe to argue that the company’s desired position is ensuring profitability, creating the right environment and impression so that customers look at it as an airline of choice in providing the right employment environment. Business Audit-Value Chain Value chain was first utilized and detailed by Michael Porter in his book Competitive Advantage. It is a summary of a business activities and their link to the competitiveness of the business. In brief, value chain looks at every single of the major activities a business undertakes. It then looks at the value each of these activities adds to the competiveness of the business/organization. In using value chain to audit a business, it is vital that one distinguishes between primary activities and support activities. Porter termed primary activities as those which are directly linked to the creation or delivery of a service. These are categorized as inbound logistics, operations, outbound logistics, marketing and sales, and service. Support activities are those that provide the drive to ensure effectiveness of the primary activities which include human resource management, procurement, technology development, and infrastructure. In auditing Virgin Atlantic, it is vital that one first identifies the particular activities falling under each of the five primary activities. These are identified as inbound logistics which are data on customers, trend analysis, and supplier relations. Virgin Atlantic has since inception maintained clear records on their customers and their schedules. This has ensured that the airline understands fully the customer cycles as well as their preferences a factor which helps in meeting their expectations. The airline has also streamlined relations with its suppliers, mainly, Airbus and Boeing who provide the aircrafts. This has ensured that their aircraft demand is met either through direct purchase or lease. This is a factor which boosts its service delivery. Operations include all the ensuing activities in enabling services. These services include proper reception in airports, proper service by pilots and the rest of the cabin crew as well as customer service in booking flights or cancellations. In this end, Virgin Atlantic has embarked on vigorous recruitment and staff training to improve service delivery. Besides, training the staff is accorded adequate infrastructural support for proper and smooth communication with clients to ensure proper services. The company also invests in grooming and training of airport handlers and its cabin crew. In terms of outbound logistics, in the case of Virgin Atlantic these include plans on airports, schedules, routes and flying zones. It has an elaborate flight schedule which is strictly adhered to. Any alterations due to weather or other unforeseen eventualities are adequately communicated to avoid inconveniences to customers. More so, the company management is constantly engaged in expanding its routes. Marketing and sales include deliberate efforts to inform customers about available services, as well as convincing them to choose Virgin Atlantic services over the other competitors. Virgin Atlantic is well known for its vigorous, elaborate and well timed advertisements which increase its market presence and enlighten customers on available services and routes. Service includes all activities to ensure sustenance of the service and maintain good customer relations. Virgin Atlantic ensures this by providing discounts for return customers, and providing clear channels through which customers can clarify issues. In case of any misunderstandings, the management and support staff are always in handy to accord any support or provide reprieve to customers. Further, the company constantly comes up with offers such as mileage and reward schemes for loyal customers. Business Linkage Virgin Atlantic management structure is inherited from the infamous Branson rule which disregards bureaucracy and rigid protocol. It has adopted a system where the management is only in place to formulate policies and provide direction; they are not required to provide rigid systems which hamper communication. The employees are free to contact management on any issue without necessarily going through the mid levels managers. This has ensured that any new and transformative ideas are firstly implemented. Besides, it has ensured that there is fast resolution of any disputes creating internal synergy. This synergy and open policy is seen in the participation of employees in crucial processes such as recruitment where they are entrusted to provide referrals for proficient employees. Such openness and understanding has provided a sound internal linkage. On linkage with the ecosystem, Virgin Atlantic continuously interacts with the ecosystem through its communications department. Besides, they are often involved in community projects and charity through their foundation, Virgin Healthcare Foundation (Tillmann 234). Through this all round approach provided by specialized units such as the communication department, the foundation ensures that the company is continuously in touch with the elements beyond it. This has a definite advantage in brand recognition and its mission and services are easily and constantly communicated to customers and the market at large. Management agenda to enhance position Virgin Atlantic has always been seen as an extension of the Richard Branson brand. This has not changed even after the acquisition of 49% by Singapore Airlines. From a managerial perspective, this has somehow hampered the way people perceive Virgin Atlantic and the way issues are handled within the airline. This is because the management approach is seen to flow from the principle owner who is popularly known to disregard protocol. This, as mentioned earlier, is good in enhancing communication but it can also be responsible for bringing undue conflicts. This results when mid level managers feel disregarded or unimportant which may also affect their productivity. To address this, it is important for Virgin Atlantic to implement an elaborate management structure with established communication channels. This will cut an image of an international organization as opposed to a personalized business. The management should also try to work on the company transparency; currently there are no frequent financial releases which may cast doubt on company performance. This may affect consumer confidence as they are not very sure of the company health. The company should also change their specialty approach; Virgin Atlantic is known to specialize in definite routes ignoring others which may not be so populated with leisure and business travelers. This affects their global presence and also hampers growth. A change in this specialty approach would accord it bigger competition space with the rest of the global carriers. Lastly, Virgin Atlantic can also choose to increase its affiliations. As the situation stands now, the business is only affiliated to Singapore airlines. This may not offer an advantageous partnership as its code sharing is still limited. According to airline strategists, code sharing offers outright advantage to an airline, but such can only be gained through major global alliances such as Oneworld. Bibliography TILLMANN, G. (2008). The business-oriented CIO a guide to market-driven management. Hoboken, N.J., John Wiley & Sons. Read More