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Virgin Atlantic - Essay Example

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Introduction Virgin Airlines is a small, niche airline which was founded by Richard Branson, who also founded Virgin Records. This airline has succeeded in a tough economy by providing outstanding service, while keeping the fleet relatively small, so it can focus on a niche who can afford the extra luxuries…
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Virgin Atlantic
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Download file to see previous pages Also, deregulation has resulted in a multitude of other airlines whom are able to provide low fares. That said, their strengths, which includes providing luxuries such as Samsung Galaxy tablets and high speed Wi-Fi, plus extra creature comforts such as flat bed and comfortable chairs, in addition to other value-added services, such as express security check-in for business customers. However, for the future, Virgin should continue to invest in higher end luxuries, and continue to keep their fleets small, and this is the best way to compete in any market. The Value Chain The value chain is one of the ways that the Virgin Airlines will be strategically examined. Porter (1985) described how firms can be broken down by their activities, and how a firm may obtain a competitive advantage by identifying these strategic activities and finding a way to perform these activities cheaper and better than its competitors (Porter, 1985, p. 34). Porter explained by the value chains may go upstream, which is the supplier delivering to the firm, and downstream, which is the firm delivering the product to the customer. Moreover, Porter states that the value chain must take a holistic approach, which means that the discrete components of its value chain must fit into an overall value system, therefore they all must be integrated. Porter goes on to explain ways that a firm might obtain a competitive advantage over other firms, such as targeting to a niche market, which would allow the firm to tailor the value chain to this niche, which results in lower costs; competing in related industries with coordinated value chains; or firms may also gain a competitive advantage by widening or narrowing their geographic markets. Porter also states that firms may gain a competitive advantage by affiliating themselves with other entities, such as mergers, joint ventures, licenses and supply agreements (Porter, 1985, p. 34). How this relates to Virgin Airlines is that, as will be explained, it is gaining a competitive advantage, through its value chain, by appealing to a niche market, which is the high-end market who is patronizing an airline because of its amenities and luxuries. As it is tailoring its strategy to this niche, as opposed to attempting to appeal to a broader market, it has been able to keep its costs down by keeping its fleet small, and diversifying only by expanding into other markets through subsidiaries. It has therefore chosen to eschew another way that Porter states that companies may gain a competitive advantage, which is through affiliating themselves with other entities. Above illustration available at: http://www.google.com/imgres?num=10&hl=en&newwindow=1&biw=1067&bih=489&tbm=isch&tbnid=Q095X0MX-AyACM:&imgrefurl=http://www.docstoc.com/docs/9354561/Porter-Value-Chain-Template&docid=gBEEIrN13AnqTM&imgurl=http://img.docstoccdn.com/thumb/orig/9354561.png&w=1500&h=1125&ei=YhDyT6faFuio2wWBkaTSCg&zoom=1&iact=hc&vpx=276&vpy=4&dur=6408&hovh=194&hovw=259&tx=136&ty=162&sig=111730839532732020329&page=2&tbnh=127&tbnw=169&start=10&ndsp=15&ved=1t:429,r:1,s:10,i:113 According to Oster (1999), the value chain is one way that an organization may be competitive by identifying where, on the value chain, they can improve upon the competition by improving or differentiating themselves from their competitors. For instance, a firm may improve its method of procurement, distribution or inventory (Oster, 1999, p. 131). Or, in the case of an airline, the airline may look at its ...Download file to see next pagesRead More
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