Stratigic Managment at Virgin Package Holidays - Case Study Example

 Executive Summary: The present report looks for making a comprehensive strategic analysis of the Virgin Package Holidays Company, the subsidiary company of world famous Virgin Group of Industries, by focusing particular concentration upon resource auditing, competitor analysis and value chain analysis of the company. The report, on the basis of the information gathered for the present research, proves the very reality that Virgin Holidays has not only rendered tremendous services in the field of package industry, but also has wide opened the new horizons of recreation and entertainment for the people belonging to different age groups, professions and socioeconomic statutes. Since people work from dawn to dusk in order to lead a comfortable and luxurious life, consuming their leisure hours in recreational activities is one of their basic rights. The contemporary era undergoes continuous rise in the prices of every commodity, which has made travelling a bit difficult. The fares and charges of both airlines and hotels respectively are also in constant increase that turns amusement activities limited and confined in this age of technological advancement. In this precarious state of affairs, Virgin Holidays is serving the people by accepting the challenging task of offering the people discounted rates of travelling, recreation and stay at hotels to spend their holidays in a thrilling and sophisticated manner. Such attractive offers earn good name, fame and reputation for the company, as well as boost up its profit level. Hence, Virgin Holidays has turned out to be the fast growing company even under the state of perfect competition by introducing new trends of amusement and thrill in the Package Holiday Industry. Introduction to Virgin Groups: Modern era of technological advancement has wide opened multiple opportunities of growth and development to millions of companies and organisations, which have taken advantage of technological revolution and have expanded their business ventures from local level to national and international scales. By this, they have successfully reached at the doorstep of their customers and consumers through their products or services or both. “Western nations, and especially the United States”, Newman & Logan observe, “rely on thousands of independent enterprises to convert resources into desired goods and services. Moreover, these enterprises provide most of the initiative for improving and adapting the flow of goods and services to new wants.” (1976, p. 2) However, there exist some gigantic personalities who contain lion’s share in all the progresses being made in respect of mitigating the distances and promoting globalisation procedure in all parts of the earth by inventing and organising tools and techniques that have paved the way towards swift development processes. Sir Richard Branson of Virgin Group of Industries is undoubtedly one such great name in the short list of trend-setters and global policy making entrepreneurs of the world in general. His competence and distinction can be observed by looking into the series of ventures he effectively launched and turned apparently impossible tasks into reality. These business accomplishments reveal his determination, incessant hard work, gifted skills and acumen. Hence, started from small recording company, Virgin Group has become an international group of industries, which is offering services in the fields of air travelling, media and publications, books and reading, IT and software products etc. “The Group has been described as a 'keiretsu' organisation - a structure of loosely linked autonomous units run by self-managed teams that use a family brand name. Branson's philosophy was that if a business got to a certain size, he would spin off a new business from the existing one.” (esecourses.com) Package Holidays is also one of the wonderful ventures launched by the Virgin Group to provide the masses with the opportunities to spend their leisure time against economical prices. Brief Overview of Virgin Holidays: Package Holidays is also one of the major companies of the Virgin Group, which has been offering its package holidays services in almost all parts of the globe for the last two and half decades against discounted rates without making any compromise on the quality of the services. “We have been arranging holidays since 1985 and are the largest, most successful transatlantic tour operator, and market leader for travel to the USA and the Caribbean. We believe you should Ask for the World because we are passionate about creating the best holidays in the whole wide world and going that extra mile to make sure you get exactly what you want, the way you want it.” (virginholidays.co.uk) Contemporary era is full of hubbub and tensions, where the state of perfect competition has increased work hours to fulfil the requirements of professional responsibilities of the individuals and they have to pay extra time in the pursuit of target achievement. Consequently, leisure time experiences immediate decrease and there are least opportunities of recreation and enjoyment. “Our average work week”, Harris states, “has dropped from 53 hours to 40 hours and it seems extremely likely that the work week will shorten even more.” (1997, p. 38) In addition, expensive travelling and hotel apartments have also darkened the probabilities of spending leisure hours in a qualitative manner. At this precarious state of affairs Virgin Holidays is rendering tremendous services by arranging different package plans for the professionals, newly wed couples, retired and elderly people and students. The Company has been working on multiple dimensions for the last many years for making the holidays of its clients remarkable and unforgettable. It holds out different recreational plans to exercise for the full time amusement of the customers and clients by making their leisure productive and creative according the definition maintained by celebrated theorist Thorstein Veblen. “The term leisure does not connote indolence or quiescence; it connotes non-productive consumption of time. Time is used non-productively from a sense of the unworthiness of productive work, and as an evidence of pecuniary ability to afford a life of idleness.” (Veblen, 2007, p. 58) Virgin Holidays—Strategic Analysis: Despite the fact that providing and presenting of the items of multiple use is really the trend of contemporary times, which is encouraged, admired and appreciated in all corners of the world by the people belonging to divergent racial, ethnic and regional groups and communities, yet it serves as a tremendous challenge for a new as well as already launched business and requires the visionary and talented ownership and the team of experienced and proficient professionals in order to combat with the growing challenges on the one hand, and the always changing corporate environment of the globe on the other. Moreover, the state of perfect competition has forced the companies to take the core values of the customers into serious consideration in order to survive and grow subsequently. The business strategies and corporate enterprises have established trends of perfect competition where people witness dramatic changes in every coming day. As people look for change, variety and perfection in provisions, there is always the need for the improvement in respect of the services produced and provided by the enterprises. These improvements can only be made with the help of outstanding devotion and talent in order to bring uniqueness and betterment in the entrepreneur. Virgin Group appears to be presenter of variety in technology and design, which capture the attention of the lovers of novelty and innovation. It boosts up the morale of the management, which works more and more diligently to splash into the ocean of hard efforts in order to present the people variety and excellence in its countless services. It is therefore the entire Virgin group, particularly Virgin Atlantic, has turned out as the second largest airline industry of the UK. “Virgin Group is one of the largest package holidays company of the UK and Europe over the North Atlantic. Our route network has grown rapidly to include destinations in the US, Caribbean, Far East, India and Africa, and we have won virtually every award the travel industry has to offer.” (virginatlantic.com) The management of Virgin Group has entered into collaboration with different companies in order to start joint venture for the multiplication of its business activities. It started business venture with reputed organisations in order to survive and grow in competition with the rival companies including British Airways, Coca-Cola and others. In addition, Virgin Company has made collaboration with Virgin Blue Australia and Delta Airlines, which is helpful in respect of introducing the company in all regions of the world. However, the company could not make absolute escape from the negative affects of constant change and instability in different oil products, and it altered its business ventures according to the market situation. Somehow, the company turned out successful in surviving under the thick clouds of unfavourable business weather with the help of broad vision and untiring efforts made by the management during the years of crisis in airline industry. One of the most astounding advantages of the Virgin Package Holidays over its competitors includes the ownership the second largest airline of England, which is extremely supportive in announcing the attractive packages to the customers from its rich platform at discounted prices. Resource Audit: Like other organisations, Virgin Package also devises in-depth strategic analyses, which are inevitable for the smooth running as well as rapid growth of an organisation. “The audit of performance or conformity consists of .making an inventory of the social situation of the company, considering the labour law norms and regularly verifying the company’s compliance with the applicable regulations. The audit should verify if firm’s policies, practices, and documents regarding employee hiring, retention, discipline, termination, and post-employment are both fair and legal. (Higgins, 1997, p. 31) The strategy of a company lays stress upon the services being offered to clients and customers. In the same way, companies audit their resources pointing out the strengths and flaws of the company. Resource audit is one of the essential parts of strategic analysis of a firm. The term specifies the resources available to a company to support its strategies. External as well as internal resources are analysed during auditing of an organisation. An organisation of international reputation like Virgin must audit both the quantity and quality of its resources to co-op with the perfect market situation of the global world. Business environment suggest the commercial activities of the companies. The Company is aware of the resource planning and deployment as significant ingredients in the successful implementation of strategies. Here is the resource auditing of the company: Physical Resources: It is aptly viewed that the resources of Virgin Group are not limited to its tangible assets only. On the contrary, the co-operation, co-ordination and dedication of its partner companies also serve as its precious resources. “The physical resources of an organisation, Warnerfelt argues, “are not confined to those which it owns; rather, strategic capability is strongly influenced by resources outside the organisation.” (1994, p. 173). In addition, the sister companies including Virgin Atlantic, Holidays Cruises and Holidays Hip Hotels are also the physical resources of the Virgin Holidays. The joint ventures, partners’ unabated faith and pleasant environment everywhere in the world make the brand a matchless product. World’s biggest companies, hotels, restaurants, fast food chains, departmental stores, sports organisations and many others have entered into contracts with Virgin Holidays to provide best services for thousands of the customers of the company. Particularly, hotels situated in different countries have signed contracts with Virgin Holidays, so that its customers could be obliged and accommodated in these hotels during their stay. “Virgin had taken on one established industry after another, from British Airways to Coca-Cola and railways, in an effort to shake up 'fat and complacent business sectors'.” (esecourses.com) Human Resources Work force of an organisation is the most precious asset for an organisation due to the very reality that workers are the identity mark of the organisation. It is their performance and hard efforts that win respectable status for their mother institution. The same is the case with Virgin Holidays, which has hired hundreds of qualified, experienced and educated personnel at managerial, officer, employees and worker levels that are working in sales, accounts, marketing, HR, finance and other departments in several countries and states of the world for Virgin Holidays. Moreover, the organisation also believes in outsourcing phenomenon and also hires employees the services of local communities in all countries where it has been rendering its services, and thus its sales volume also increases because of the inclusion of local people as the work force of Virgin Holidays. Financial Resources Financial resources of an organisation certainly determine the commercial activities and business ventures of the organisation. “Virgin Holidays is set to launch a new concierge lounge in Barbados to help holiday makers get the most from their time away.  The stylish lounge at Waves Resort in St James will offer a relaxing space for Virgin Holidays customers to speak to their concierge team and plan a memorable time in Barbados.” (businessbarbados.com/) The airplanes, ships, buildings, offices and huge investment made by the management serve as the financial resources of Virgin Holidays. In addition, the management vehemently concentrates upon the five “Ps”’ as the tower of its strength, which include people, partners, planets, portfolio and profit. In the contemporary times, almost all the companies are normally offering the same product at the same price. It is therefore public relations play an important part along with marketing and advertising campaigns. Virgin Group is proud of the wide range of its consumers and in recently conducted research by its social research department; it is another feather in its cap by knowing that an overwhelming majority of the people belonging to Europe, Australia and the USA identifies its brand and logo. Furthermore, its exceptional logo, wide range of partners, bank deposits and assets of its sister companies are also a reliable source of taking great risks regarding enhancement of their product volume. Intangible Resources Virgin Package Holidays has earned great respect and honour as one of the best service provider against economical prices at almost all important cities of the globe. Furthermore, the company also carries sound reputation and intellectual property including unique and well-recognised logo, patents, trademark and product colour. The company’s good name and fame is also powerful resource that serves as the best of its intangible assets. Value Chain Analysis of Virgin Holidays: Value chain analysis is highly beneficial and valuable method of interrelating resources with the strategic point for which these resources are to be exercised. It also explains the corporate activities within an organization in order to analyze the whole business scenario. “It is a key to understanding strategic capability”, Johnson & Scholes argue, “since it requires an analysis which goes beyond the resource audit and looks in detail how resources are being utilized, controlled and linked together.” (1995, p. 119) Identifying the activities of an organization is the primary step while moving from resource audit towards analysing the organization’s strategic capability. Value chain analysis is highly supportive in this regard. Porter (1985) has presented a comprehensive scheme of the value chain analysis, which is as under: Firm infrastructure Human resources management Margin Technology development Procurement Inbound Operations Outbound Marketing Service logistics & sales Margin Primary Activities In the above figure, five areas have been shown as primary activities. Inbound logistics activities concentrate on managing of material, stock, transport and supply control. All this comes under the logistic department. Virgin Package has successfully combated with this challenge. An independent cell works under the supervision of director, who supervises the whole stock management with the team of professionals and technical staff, in collaboration with the director operations. “Operations” is the second area of primary activities and is responsible for the proper presentation of the finished product. Further, the manager(s) operations examine the proper working of machinery so that the company can avoid any product shortage or relevant untoward situation. The third activity i.e. Outbound Logistics lays stress on mobilising the product to customers. CORE COMPETENCES Core competencies signify the strengths of a company while estimating its resources including strengths and weakness to make its comparison with the rival companies. It helps the companies in respect of inventing newer things that surely increase the popularity of the company at large. In addition, it is highly beneficial to capitalize on new opportunities. “Whilst the diversity of Virgin's business interests has been questioned, Branson has insisted that their core values and approach have remained the same. The name Virgin was chosen to represent the idea of the company being a virgin in every business they enter. However, before entering a new market, it was thoroughly researched to decide whether Virgin could offer something truly different: the aim being to extend the brand name at a low cost into selected areas where its reputation could be used to shake up a relatively static market.” (esecourses.com) Companies can utilise their best capabilities if they make their core competency analysis. The concept core competency includes appropriability, durability, transferability and replicability. “Appropriability”, Berkeley education website states, “identifies the extent to which something can be imitated.” (Quoted in sims.berkeley.edu) A product can be declared as containing strong appropriability provided it is quite knotty to recreate and reproduce by some other company or industry. Conclusion: To conclude, the study shows that Virgin Holidays has superiority over its competitors, which has earned distinguished place for the company. “Virgin Brand recognised by 98% of British Public. Clients expect good customer service in each separate class Business/Economy. In addition, Virgin Atlantic introduced innovative technology: including in flight music, ice cream, games, and movies. New in flight innovation is offered to gold club holders or J-class with lounges offering quality food and comfort. Quality trained employees recruited from other airlines.” (Manning, Salter & Tuinzing, 2005, p. 12) The company has completed its long journey towards success within few years. It seeks great support from its sister companies including airline and ship corporation, which the competitors certainly lack. While estimating its weaknesses, Virgin undergoes the tough competition fro its rivals that have been in the market many years before its entry into the market. An overwhelming increase in the prices of oil products and tickets has drastically decreased the percentage of travelling almost all over the world. It also perturbs the commercial activities of Virgin Company too. Furthermore, too much reliance upon the sister companies has made Virgin Holidays a limited and dependent corporation, which is unable to take bold steps and make courageous decisions in this era of perfect competition. Hence, almost all strategic decisions are made by the parent organizations regarding the new market schemes for Virgin Holidays. Moreover, wars and uncertain socio-political circumstances have also challenged the recreational activities in various regions of the world. Being direct association with hotel and travelling industry, Virgin Holidays had to face great setback during the Gulf Wars and terrorism. REFERENCES: Higgins, H. N. (1997) Personnel Audit. National Public Accountant p. 31 Johnson, Gerry & Scholes, Kevan. (1993). Exploring Corporate Strategy. Text and Cases. Third Edition. Prentice Hall New York pp 98-121 Manning, Donal., Salter, James E. & Tuinzing, Andre (2005) Virgin Atlantic Marketing Case Study Prepared for Professor Enda McGovern Dominican University of California Quoted in http://www.safarigraphics.com/salterquest/portfolioPDFs/ws_Virgin_Atlantic_Marketing_Case_Study.pdf Newman, William H. & Logan, James P. (1976) Strategy, Policy, and Central Management Seventh Edition, South-Western Publishing Company, West Chicago Virgin Atlantic Airways. Our Sister Companies Retrieved from http://www.virginholidays.co.uk/info/about/who_are_we/our_sister_companies.aspx Business Barbados (2010) Virgin Holidays Launches Concierge Lounge in Barbados http://www.businessbarbados.com/News/Press-Releases/Article/Virgin-Holidays-Launches-Concierge-Lounge-in-Barbados.html Why Virgin Holidays? Retrieved from http://www.virginholidays.co.uk/info/about/who_are_we/ Retrieved fromhttp://esecourses.com/cfincase.pdf Veblen, Thorstein (2007) Theory of Leisure Class Cosimo Inc. http://www.virginholidays.co.uk/info/about/who_are_we/our_sister_companies.aspx Ask for the World: About Virgin Holidays http://www.michaelpage.co.uk/client-profile/2620/virgin-holidays.html Virgin Group. Resource: Exploring Corporate Strategy Retrieved from http://esecourses.com/cfincase.pdf Read More