Virgin Atlantic Airways - SWOT and PESTLE Analyses - Case Study Example

Table of contents 1.0 Executive summary 1 2.0 Introduction 2 3.0 Background 3 4.0 Mission statement 4 5.0 PESTLE analysis 4 5.1. Political 4 5.2 Economical 5 5.3 Social factors 5 5.4 Technological factors 6 5.5 Legal factors 7 6.0 SWOT analysis 7 6.1 Strengths 7 6.2 Weakness 9 6.3 Opportunities 9 6.4 Threats 10 7.0 Successes 11 8.0 Recommendation 11 9.0 Conclusion 12 10.0 Reference: 13 1.0 Executive summary Virgin Atlantic airline gives air transport services for freight and also passengers. It was started by Randolf Fields and Alan Hellary. In the year 1984, Virgin Atlantic started operating its air services between Netwark Liberty and London Gatwick. This airline is highly reputed to offer quality services and it is the second largest airline in United Kingdom. The airline aims at making the company a place where people desire to fly and to work. The external analysis of Virgin Atlantic airline reveals that political, economic, socio-cultural and legal factors affect the operation in Virgin Atlantic airline. This airline has got strengths weaknesses and opportunities and threats just like any other organization. The strengths are evident in the personnel that are in this organization. (Anthony, 1998) Virgin Atlantic airline has got qualified personnel that have high integrity and this has made the airline easily be recognized by its brand name. The airline has managed to maintain customers who have religiously remained loyal to it. The opportunities lie in having more operating destinations and more flights. Competitors for Virgin Atlantic airline include British airways, American and United airways. They are incorporating advanced technology which poses as a threat to Virgin Atlantic airline. With outsourcing of experts and extensive research this airline will be in a position to keep up with the fast moving industry. 2.0 Introduction Virgin Atlantic Airways Ltd is a British airline that is owned by Singapore Airlines and Richard Branson’s Virgin Group. Singapore airline owns 49% while Richard Branson’s Virgin group owns 51% of the Virgin Atlantic Airways Ltd. This airway operates long –haul routes that is between North America, Australia, Asia, Middle East, Africa, Caribbean and United Kingdom. This Company holds a license with United Kingdom Civil Aviation Authority. This allows it to carry cargo, passengers and mail. The aircrafts have got twenty seats. This is the second largest airline in United Kingdom. It provides its services to approximately twenty two destinations. The destinations include; Barbados, Lagos, Johannesburg, Hong Kong and London Hub. (Branson, 2006) 3.0 Background In the year 1982, Alan Hellary and Randolf Fields started the British Atlantic Airways which was a successor of Laker Airways. In the year 1982, Fields had the idea of starting up an airline that would fly from Falklands to London and back. More expertise was however needed for this service. Two attempts were made which also failed but Fields and Hellary persevered. They applied for license of flying between Gatwick and London. There was stiff competition from People express which was expanding quite rapidly. The two decided to get more funding before they proceeded with their new airline that they had proposed. Later on Fields proposed a business partnership between Branson and himself. This resulted in having the virgin Atlantic airlines. In the year 1984, Virgin Atlantic started operating its air services between Netwark Liberty and London Gatwick. 4.0 Mission statement The mission statement of Virgin Atlantic airline is growing a profitable airline where people love to work and where people love to fly. For this reason all the staff including cabin crew, salon staff, pilots and engineers give highest standards of service, safety and comfort. They believe that good enough is not actually good enough. They carry out their responsibilities to deliver their best. This has made the airline reputed for integrity, friendliness and intelligence all over the world. (Gregory, 2000) 5.0 PESTLE analysis P.E.S.T.L.E analysis has been used to analyze their external business environment. The simple analysis involves understanding the organization’s political, economic, social and technological environments with reference to those who do business with the airline. 5.1. Political Political factors have had a direct and indirect effect on the performance of the Virgin Atlantic airways. Some of the decisions made by the federal government of the United Kingdom have impacted negatively on the operations of Virgin Atlantic airways. Take for example legal suits brought against in 2001 and the decision to minimize the production and marketing of high performance computers to countries believed to be a threat to United Kingdom security. This has had huge implications to Virgin Atlantic airways. 5.2 Economical Every business is affected by economic factors. Fiscal policy rates, interest rate policy, currency exchange rates, consumer factors, etc. The entire United Kingdom climate of the economy dictates how the consumer behaves in the society. If an economy is booming, recessing or recovering, the confidence of the consumer will automatically change. This has affected the operations in Virgin Atlantic airways because it has to adhere to the fluctuations in the market in line with customer perception. Virgin Atlantic airline’s operation is mostly affected by the economic factors such that when there is economic recession in the nation, less people use air transport and they prefer other means like road etc. Many families cut down on their transport costs which include travelling for leisure especially to the African countries. During such times the airline has few customers and therefore minimal profits are made. (Hilltop, 1994) 5.3 Social factors Forces within the society such as media, family and friends have affected the way a Virgin Atlantic airway has sold its products. Most of the customers have been mislead to believe that products and services of companies or organizations in United Kingdom are of high quality. This means Virgin Atlantic airways has benefited heavily. Social factors affect our attitude, opinions and interests on the way we view services and products from certain companies. These factors have made Virgin Atlantic airways to be successful in other nations like Barbados, Lagos, Johannesburg and Hong Kong. This is just because of social factors. 5.4 Technological factors The way Virgin Atlantic operates its business has changed as technology changes. The internet for example, has assisted airways such as Virgin Atlantic airway to meet new markets and extend its global outreach. It has had a profound impact on the marketing mix strategies of this United Kingdom based airway. Business should keep in touch with changing technology and modernization in this ever changing world. One of the business sectors that always have to keep abreast with technology is the airline industry. This is because the technology in this sector changes so fast and any airline that does not keep pace can lead to compromise in the safety of customers. This also helps it to have competitive advantage over other airlines. Virgin Atlantic airline has had to keep pace with technological advancement especially in line with e-commerce. For instance flight booking and cancellations can be carried out online. The technology that is currently good in this industry includes multi channelling. This airline boasts of having Radio Frequency Identification (RFID) which is used in repairs and maintenance of the aircrafts. (Hilltop, 1994) 5.5 Legal factors This is the way the airline operates in terms of operating rules of law. The airway is engaged in legal business practice of giving air transport services which is permitted by law. Research shows that legal factors affect the operation in Virgin Atlantic airline because it has to adhere to the legal factors. For instance the airline is licensed to carry passengers in relation to the capacity of the aircrafts. Any exceeding is against the law in relation to all the nations that the airline operates. (Maund, 2001) 6.0 SWOT analysis The following is a SWOT analysis framework. Environmental Analysis            / \            Internal Analysis       External Analysis / \                 / \ Strengths   Weaknesses    Opportunities   Threats | SWOT Matrix Internal and external environment of an organization is very important to its strategic planning process Strengths and weaknesses fall in the internal environment of an organization. Threats and opportunities are usually external factors affecting a firm. 6.1 Strengths An organization’s strengths always refer to its capabilities and resources that help it to have a competitive advantage over other organizations. An organization can have a strong brand name which will help the organization to have a competitive advantage. Looking at Virgin Atlantic airways has got very much strength. One of them is in its brand name. The name Virgin Atlantic is unique and therefore attracts very many customers to use the airline. (Rampton, 2003) The other strength in Virgin Atlantic airways is its ability to reach a wide scope of customers. This is due to many branches that exist all over the world. Research shows that this airline service provider is quite global in nature. It operates its services to Barbados, Lagos, Johannesburg, Hong Kong and London Hub. This is a great strength for this airline. Another strength that is found in Virgin Atlantic airline is its technology use. This airline has incorporated advanced technology and this has enabled it to offer quality services to customers. One aspect that is important to airlines is safety. This airline is highly reputed for safety and this has enabled customers remain loyal to it. Its up dated website enables customers to book for their flights on line. The comfort in Virgin Atlantic airline is exceptional. The airline also has got qualified personnel like the cabin crew, control assistants, flight attendants, customer care, pilots and stewards. Another strength that is found in Virgin Atlantic is its flexibility in adapting to new technology in the future. This airline is not tied to single technology. 6.2 Weakness In case an organization lacks some strength, this can be termed as a weakness. A close analysis of Virgin Atlantic airline shows that it has some weaknesses. One of them is very evident in their prices. Virgin Atlantic airline flight charges are slightly higher than the airlines. This makes most people who are middle class not to afford their services. Another weakness in Virgin Atlantic airline is in their departure control systems which are not really updated to the current technology. (Branson, 2006) 6.3 Opportunities There are many opportunities that exist for Virgin airlines in relation to emerging markets. There are great emerging markets in Japan, Asia, Florida and also western parts of Africa. One of the opportunities for Virgin Atlantic airways is the upgrading of the existing website. This is to enable it offer smooth service to the customers. This will encourage more passengers to book online and the website will be in a position to handle increased user traffic. This is especially from US and UK. This involves incorporating technology architecture. (McNamara, 1999) The Virgin Atlantic airway has the opportunity of expanding its e-business. This will enable it to experience or have increased profits in the future years to come. Virgin Atlantic airway has the opportunity of incorporating outsourcing of experts from other nations. This is in line with technological advancement and in the management. Virgin Atlantic airline has the opportunity of expanding its scope of customers that is if it will incorporate the required technology to avoid crowding or customers waiting to be attended to even via the email. 6.4 Threats There are always situations when changes in the external environment where an organization exists may pose as a threat to the firm. There are times when government regulations may hinder the operation of the organization. This can also be termed as a threat. Other instances involve increased barriers in trade that it becomes hard for the organization to operate. Virgin Atlantic airway experiences threats from its immediate environment. This is especially from its competitors. One of the competitors that have been there for Virgin Atlantic airway since its inception is the British airways. Virgin Atlantic airline sold 49 percent of the Company to Singapore airline and this possess as a threat to its management. (Anthony, 1998) Virgin Atlantic airway faces threats from other competitor airways like British airways and American airlines. This is in terms of customer service and also policies that affect the overall running of the airlines. These airlines pose as threat in terms of opening many operation routes. This creates a narrow market for Virgin Atlantic airline. These competitor airlines also pose a threat in their technological advancement hence increase in their customer base. There are recent government regulations on airlines that are a threat to operation of Virgin Atlantic airway. This is because this airway has to obey and follow these regulations which may lead to increased costs in operations. 7.0 Successes One of the successes of Virgin Atlantic is the migration of all its databases of 90 Oracle base from IBM sequent systems. These were migrated to Sun Fire 6800 servers. This resulted in the consolidation of nine servers into two. Virgin Atlantic airline enjoys improved performance due to this migration. (Collett, 1999) It also enjoys scalability, capacity and the support from third party and Oracle developers. This airline boasts of the success of serving approximately 19 destinations all over the world. Virgin Atlantic airline has won the loyalty of its customers due to its quality services and safety among other factors. This Company has successfully incorporated information technology in its database. This company also took advantage of educational opportunities that were offered by Sun Educational Services. 8.0 Recommendation The airline industry is an industry that has fast technological advancement. To keep abreast with this, Virgin Atlantic airline has to carry out outsourcing of experts in information and other technological sectors. This will enable it to stand the stiff competition that it is getting from British airways and American airways. I recommend that the research team in this company has to have continuous organizational training and development often. Research has to be carried out quite extensively in relation to the market, current and even future competitors for Virgin Atlantic airline. 9.0 Conclusion Virgin Atlantic airline is the second largest in United Kingdom. This airline is owned by Singapore Airlines and Richard Branson’s Virgin Group. This airway operates long –haul routes that is between North America, Australia, Asia, Middle East, Africa, Caribbean and United Kingdom. This Company just like any other is affected by external factors which are political, economic, socio-cultural and legal factors. This airline has also got its strengths and weaknesses. The strengths include its operation to many destinations and therefore it is in a position to serve a wide scope of customers. The Virgin Atlantic Airline has incorporated updated information technology which makes it offer quality services to its customers. This company is highly reputable of having qualified personnel who have integrity are friendly and intelligent. The threats for Virgin Atlantic airline include Competitors like British Airways, American and United. These airlines have gone global and this is narrowing down the customer base for Virgin Atlantic. They also have advanced technology that enable them offer quality service to customers. This airline has opportunities of having more operating destinations and more flight especially to the African nations. 10.0 Reference: Anthony, C. (1998): SWOT Analysis; An explanation of the S.W.O.T. Analysis process; New York; Macmillan Press Branson, R. (2006): Virgin Atlantic airline’s success; retrieved from; www.virginatlantic.com accessed on 24-10-07 Collett, S. (1999): SWOT Analysis; Computerworld; New York; John Wiley & Sons; Vol.33; 19-43 Gregory, M. (2000): Dirty Tricks; British Airways' Secret War against Virgin Atlantic; New York: Virgin Books Ltd Hilltop, J. (1994): European Human Resource Management in Transition; New York Prentice Hall McNamara, C. (1999): Strengths; Weaknesses; Opportunities and Threats; UK Oxford University Press Maund, L. (2001): An Introduction to Human to Human Resource Management: Theory And Practice: Macmillan Press Rampton, L. (2003): Human Resource Management; New York; Melbourne Press Read More