Virgin Atlantic and Climate Change - Case Study Example

Virgin Atlantic and Climate Change 0. Introduction One of the most significant criteria for the evaluation of organizational performance has been the ability of a firm to remain competitive under difficult market conditions; however, quite often the organizational success can be based on different criteria –taking into consideration the theories and the concepts developed in management theory – the part of the scientific research that focuses on the examination and the explanation of the methods developed by managers in modern organizations for the administrations of various business activities. It should be noted that through the decades, different concepts have been incorporated in the management theory; determinism, choice and interaction – concepts mentioned in the study of Boddy (2008, 25) – are indicative examples of the theoretical frameworks used by managers in order to proceed to specific decisions and evaluate the effectiveness of their plans. At the same time, efforts have been made in order to incorporate all existing management theories in appropriately structured models that could fit in various market conditions and different industrial sectors; the Competing Values Framework developed by Quinn in 1983 is one of the most important models of this kind (see Appendices, Figure 1). The effectiveness of the Competing Values Framework (CVF) could be understood by comparing the principles and the concepts including in this model with the management theories that focus on specific organizational problems. The theories of determinism, choice and interaction – mentioned above – could be explained at this point in order to make clear the advantage of the CVF over its rivals; determinism is characterized as ‘the view that people have no influence on events, which are the result of forces beyond their control’ (Boddy, 2008, 25) – the concept of determinism is in opposition with that of ‘choice’ which states that people ‘can influence events’ (Boddy, 2008, 25); an intermediate concept is that of ‘interaction’ which refers to the existence of a ‘dual bond’ between people and events – each part can influence and be influenced by the other part (Boddy, 2008, 25). In another study, the theory of Robey and Boudreau developed in 1999 is used in order to explain the development of effective IS systems; towards this direction it is noted that ‘effects of IS on organizations may best be understood by using theories that identify forces promoting and resisting change’ (Robey and Boudreau, 1999 in Boddy et al., 2008, 160); other management theories also referring to the development and the evaluation of various management decisions are the following ones: the rational goal theory – emphasizing on the need for setting clear goals that would be supported by the manager that would be the director and the producer of each organizational project - the internal process theory – emphasizing on the need for using specific routes and appropriate hierarchy for achieving organizational goals with the cooperation of manager – the human relations theory – emphasizing on the importance of cooperation in the development of successful managerial plans – and the open systems theory – which emphasize on the importance of innovation and flexibility for the success of business plans (see also Figure 2, Appendices). In order to increase the effectiveness of management theory, Quinn developed in 1983 the Competing Values Framework (CVF) that combines four different management theories – the rational goal theory, the internal process theory, the human relations theory and the open systems theory; using the CVF managers in modern organizations can increase the effectiveness of business plans – specific parts of organization are supported and employed each time that a particular business activity is to be planned and developed. The Competing Values Framework is used in this study in order to check and evaluate the effectiveness of the managerial decisions in a specific organization: the Virgin Atlantic, a British firm that operates in the airline industry. It is found that improvements on existing organizational practices are necessary in order for the firm’s performance to be stabilized with prospects for further increase in the future. 2.0. Virgin Atlantic 2.1. Organization Overview Virgin Atlantic is one of the most powerful organisations in the British airline industry; the firm was first established by Richard Branson in 1984 – as part of the Virgin Group, a firm which was established by Richard Branson in 1970; in 1992 Branson decided to further develop Virgin Atlantic – Virgin Music was sold and the profits generated were invested on Virgin Atlantic – a decision that made the firm more powerful towards its competitors; since 1999 a percentage of 49% of the firm is controlled by Singapore Airlines (see corporate website, History); 51% of the firm is controlled by the Virgin Group; the firm’s employees have been estimated to 9,000 - for 2008; for the year 2008 the firm’s profits have been estimated to £60.9m. The development of the firm through the years has been continuous – despite the risk undertaken by Branson by its establishment – Virgin Group has been traditionally a firm operating in the entertainment industry – airline industry has been a challenge for Branson who proved to have the qualities of a successful entrepreneur; in fact, in 1989 Virgin Atlantic has been voted as the third most profitable airline in the world – today Virgin Atlantic is the ‘second largest long haul airline in the UK and the third largest European carrier over the North Atlantic; the company’s route network has grown to include destinations in the US, Caribbean, Far East, India and Africa’ (Design Council UK, 2009, online article); however, delays have been identified in the increase of organizational performance (referring to Virgin Atlantic), a fact that proves the existence of weaknesses in organizational structure and administration; the use of the Competing Values Framework could possibly help to the limitation of these delays and the improvement of the firm’s performance either in the short or the long term. 2.2. Description of organizational structure and operations using management theory In the management theories presented in the introductory section, four are the competencies that need to characterize managers in modern organizations: the ability to set clear goals – rational goal theory - the ability to develop appropriate routes and effectively distribute roles – the internal process theory - the ability to be committed and cooperate towards the achievement of organizational goals – the human relations theory – and the ability to accept change and develop innovative plans – in the context of open systems theory. The structure and the leadership style of Virgin Atlantic could be evaluated using the above theories – as they are incorporated in the Competing Values Framework; at a next level, recommendations would be made – if weaknesses in the firm’s structure and leadership style are identified – taking into consideration the similar practices of competitors. In Virgin Atlantic, organizational plans are supported by a company-wide project management system (Design Council, 2009, online article); this system offers to the firm’s employees the chance to participate equally – as possible, within the context of their role in the firm – in the development of organizational plans. The firm’s president, Sir Richard Branson, has the control of the firm’s plans - however, because of the volume of the firm’s tasks his participation in the development of various business activities is limited; the management of the firm has been delegated to three executives and 8 Directors – all business activities have been incorporated – after being appropriately categorized - in two different departments: the Finance and the Operations departments; at a next level, business activities have been classified into further categories – for example, the Sales and Marketing sector, the Engineering sector, the Product & Service sector, the Cargo sector, the HR sector and so on (see corporate website, Press Office). Up to this point, the firm seems to be aligned with most of the criteria setting by the Competing Values Framework; however, the specific model requires that managers in modern firms have – simultaneously – a series of qualities – being successful directors, coordinators, facilitators, brokers, innovators and so on; the co-existence of these qualities in managers of the firm can be identified only through their decisions – the firm’s performance would be used to decide on the effectiveness of business plans either in the short and the long term – an issue that could be further investigated. On the other hand, the fact that organizational sectors are distinguished ensures that clear organizational goals can be set – rational goal theory; at a next level, a clear hierarchy has been developed regarding the administration of the firm’s various activities – the existence of this hierarchy could be related with the establishment of specific routes and the enhancement of cooperation towards the achievement of organizational goals – internal process theory; however, it is not clear whether the support of team-work across the organization is sufficiently supported – human relations theory; innovation and flexibility are two major characteristics of the firm’s plans – as of most of the plans of Virgin Group – the Group of firms in which Virgin Atlantic belongs. 3.0. Virgin Atlantic and the climate change In accordance with the management theory, climate in organizations is related with the following issues: the bottom line of the organization, the hierarchy of tasks but also the hierarchy of roles, the teamwork and the innovation/ flexibility. Under the influence of the global crisis, Virgin has managed to keep its performance at high levels – see the graph in Figure 3, Appendices and the figures published in the corporate website (sections of History and key facts). The firm is directed by two different teams: the team allocated by the Virgin Group and that allocated by the Singapore Airlines – which controls the 49% of the firm; the above fact is just one of the factors that adversely affect climate in Virgin Atlantic – the global financial crisis is another factor that negatively affects the cooperation of employees – the increase of competition among employees is the expected result of the increase of unemployment (referring to the industry in general) and the increase of organizational demands under the pressure of the competitors’ initiatives. It should be noted that the criteria set by the management theory – as presented above – are partially met by the firm – referring to the Climate sector; team-working and cooperation would be further supported across the organization – the co-existence of two different management teams – as explained above – could cause delays to the improvement of cooperation across the firm; specific measures would be required – as indicatively presented in the section that follows – in order for the firm’s climate to be improved – leading to the increase of organizational performance and the stabilization of the firm in the global market. 4.0. Recommendations The current performance of Virgin Atlantic can be characterized as satisfactory; its further development could be achieved by incorporating the following policies: a) allocation of a team that would act as a ‘bond’ between Singapore Airlines and the Virgin Group – possibly by arranging common tasks and initiatives, b) further development of the firm’s existing HR department – hiring of HR executives that would support the firm’s HR director, c) development of a system that could help to the identification of the employees’ skills/ competencies – the aim of this effort would be to improve the allocation of tasks and roles across the organization, d) the introduction of effective cost management plans – referring to the firm’s HR department – funds invested on training and remuneration should be checked and carefully planned – taking into consideration the firm’s other needs; on the other hand, the increase of the funds invested on the firm’s HR sector would be suggested by the HR managers if such a decision would be considered as crucial for the improvement of the employees’ performance. Finally, the allocation of a team that would check the alignment of the firm’s policies with the existing management theory – referring especially to the Competing Values Framework – would be possibly decided – in case that the performance of the other measures suggested above would be proved to be low – even in the short term. 5.0. Conclusion The position of Virgin Atlantic in the British and the global airline industry proves the effectiveness and appropriateness of its plans; however, it has also been revealed that the challenges that the firm is asked to face in the context of the current global crisis are many; the fact that the firm remains private could be considered as an additional constraint; the access to its balance sheet is prohibited to the public – due to the firm’s current form; potential investors could decide to avoid investing in the firm as its assets and obligations cannot be clearly identified and evaluated. The above assumption could be further based on the fact that the reports of Singapore Airlines – which controls the 49% of the firm – on the firm’s performance are extremely negative – in a relevant report published by the Times Online (May 28, 2009) it is noted that (referring to the Singapore Airlines) ‘its annual figures, produced under the widely adopted international financial reporting standards (IFRS), suggest that Virgin Atlantic barely broke even last year, and suffered heavily in the fourth quarter’ (Times Online, 2009); however, the above fact is not verified through the data published by the firm but also by other organizations – see for example the report of the Design Council (2009) or the one published by the Fortune (August 1, 2008) – see also the graph in Figure 3, Appendices; on the other hand, the management of the firm meets most of the requirements of the management theory – as set by the Competing Values Framework; improvements in the human relations sector of the organization would be necessary for the further increase of organizational performance. The alteration of the firm’s existing HR policies could lead to the increase of cooperation and team-working across the organization – a fact that could further lead to the increase of organizational productivity in the short or the long term. Bibliography/ List of References Antonakis, J., Cianciolo, A., Sternberg, R. (2004) The nature of leadership. SAGE Bettley, A., Mayle, D. (2005) Operations management: a strategic approach. SAGE Boddy, D., Boonstra, A., Kennedy, G. (2008) Managing Information Systems: Strategy and Organisation, 3rd Edition. Pearson Education Boddy, D. (2008) Management: An Introduction, 4th Edition. Pearson Education Cameron, K., Quinn, R. (2005) Diagnosing and changing organizational culture: based on the competing values framework. John Wiley and Sons Daft, R., Marcic, D. (2008) Understanding Management, 6th Edition. Cengage Learning Daft, R. (2007) New era of management, 2nd Edition. Cengage Learning Dixon, R. (2003) The management task, 3rd Edition. Butterworth-Heinemann Lussier, R., Achua, C. (2009) Leadership: Theory, Application, & Skill Development, 4th Edition. Cengage Learning Online sources Design Council, 2009, available at http://www.designcouncil.org.uk/About-Design/managingdesign/Design-at-Virgin-Atlantic-Airways/The-Virgin-Atlantic-design-process/ Times Online, May 28 2009, available at http://business.timesonline.co.uk/tol/business/industry_sectors/need_to_know/article6381384.ece The Fortune, August 1, 2008, available at http://money.cnn.com/2008/07/31/news/companies/siklos_virgin_america.fortune/index.htm Virgin Atlantic, 2010, corporate website, available at http://www.virginatlantic.com/en/us/allaboutus/index.jsp Appendices Figure 1 – The Competing Values Framework – Quinn and Rohrbaugh, 1983, source: http://www.valuebasedmanagement.net/methods_quinn_competing_values_framework.html Figure 2 – The four management models – Dixon, 2003, 17 Figure 3 – Virgin Atlantic – Traffic Rank graph (source: http://pricemy.com/virgin-atlantic.com) Read More