Contemporary Management Systems: Virgin Australia - Assignment Example

Virgin airways Australia is a subsidiary of the well-recognized and renowned Virgin Group. Despite having business operations in various markets with around 300 companies worldwide, the Group ventured into the aviation market for the first time in the year 2000 with its line of Virgin Airways. The brand Virgin Australia was launched in 2011. It is now constituted as Australia’s 2nd largest airline. The airline is using Embraer jets, Boeing, and Airbus for its services and is operating in 29 cities in Australia. According to Syntax, the airline is now constituted in the 4-star category (Virgin Australia).
Internal and External Analysis:
The domain of internal and external factors for Virgin Airways would be discussed using the PEST and SWOT analysis respectively so as to give a more explicit insight into the influencing factors for the company.
PEST Analysis:
- Political – Legal Impacts: In terms of the political scenario, it can be seen that the liberal policy environment along with the airline industry deregulation has served as a major factor boosting competition in the industry and encouraging new entrants in the market.


- Economic Impacts: The economic turmoil following the events of 9/11 and SARS has put the airline industry in a challenging environment. Along with that, the rising prices of fuel have increased the basic costs of flights while the consumer base on the other hand is reluctant to spend money in times of rising inflation.
- Socio-Cultural Impacts: In this context, the challenge is to get an adequate labor force for the operations from the tight labor markets especially for operations requiring skilled labor, which is quite essential for the airline industry.
- Technological Impacts: The rapidly changing advancement in technology has led to the creation of knowledge-dependent global industries. The biggest challenge today for all companies is to keep pace with these advancements and talking in the context of Virgin Airways; they would have to upgrade their operations and aircraft to achieve better economies of scale in these testing times.

SWOT Analysis:

- Strengths: The greatest strength that Virgin Airways has is that of a strong supporting structure in form of the Virgin Group. Along with that, the company has well established itself as a well-recognized brand in the market that it serves as a low-cost, no-frills traveling service provider capitalizing perfectly on the need of the time.
- Weaknesses: On the downside, Virgin Airways is faced with strong competition from Qantas Airlines that follows a more or less similar business model. Hence, the competencies that Virgin Airways is relying on are pretty much imitable.
- Opportunities: The Company has a lot of potentials to grow on the regional fronts; it could effectively put its might in the brand and financial backing to exploit opportunities that give an edge over the competitors. The Virgin group could make an appeal to the government to allow more than one airline in the Australian market to cater to internal air services along with Virgin Blue.

- Threats: The biggest threats that Virgin Airways face is in terms of the rising costs of fuel along with issues of aviation insurance, and the unstable global political scenario causing immense insecurity in the overall aviation business. Along with that, there is always a threat of new entrants challenging to take away the market share.

Planning and Strategy Formulation:
Virgin Airways defines its strategy as being creative in dealing with challenges. The airline relies heavily on the ideology of the Virgin brand name in relation to providing quality services in an affordable bracket (Johnson, Scholes & Whittingtton, 2008). It puts great emphasis on the betterment of its human resource by a strong focus on the values, culture, and pioneering leadership. The management style being employed by the company is more entrepreneurial in nature. Along with that, the airline controls the reins of leadership through delegation of authority. The company prides itself on being proactive and quick to act (Wit & Meyer, 2010).

Ever since its emergence, Virgin Airways has given its competitors a run for their money through highly differentiated offers, aggressive marketing strategies, and hard to imitate pricing strategy. Over the past few years, the Virgin Group is repositioning its airline industry to compete on a global scale and this was why Virgin Blue, Pacific Blue, and V Australia were consolidated under the identity of Virgin Australia (Pride et al, 2011).

Organizational Change:
Previously recognized for its low cost- no frills attached services that enabled the sector consumer base to travel by air that otherwise would not have been able to do so, over the past few years, with the increasing popularity of the brand, the Virgin airways has come to redefine its strategy to accommodate services that are more in line with the other companies in the business. The company underwent some major changes last year with the introduction of business class, new uniforms, and catering on board along with some new aircraft and livery in order to better position itself among the other competitors. The company relies heavily on the establishment of the right sort of culture, recruiting for cultural fit, and encouraging employee engagement to keep the morale up while dealing with these changes.

Implementation of CSR and Ethical Behaviour:
Virgin Airlines takes into consideration the aspects of CSR and ethical behaviors by acknowledging the aspects of water management, waste management, and energy management in their operations. It is also a participant in the Aviation Green Paper movement. It also has a comprehensive carbon offset program and greenhouse friendly program to address the issues related to greenhouse gas emissions (Melbourne Convention and Visitors Bureau).