The Strategic Plan for Virgin Blue Airways - Case Study Example

Executive Summary A strategy is an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain competitive advantage. (Jones, 2010) postulates that a firm gains a competitive advantage when it implements the strategy that competitors are unable to duplicate or find it costly to imitate Virgin Blue Airways’ Strategic Plan 2009-2011 has outlined the measures the airline will put in place to ensure that it maintains a competitive edge in the cut-throat airline industry. For any organization’s plan to succeed, the human resource component must be taken into consideration. Miller (1987) argues that “Human Resource Management relates to those decisions and actions which concern the management of employees at all levels in the business and which are related to the implementation of strategies directed towards creating and sustaining competitive advantage" (p. 352). The Human Resources Strategic Plan will ensure that the human resource goals are in tandem with the organization’s aspirations, goals and objectives. A firm’s strategic competitiveness is achieved when they’ve successfully formulated and implemented a value-creating strategy (Hanson, Hitt, Ireland & Hoskisson, 2011). Analysis of Strategic Plan The Strategic Plan for Virgin Blue Airways identifies key areas that need to be addressed to for the period up to 2011. The plan covers a 3 year period 2009-2011 and it seeks to build a world class airline internationally recognized and locally accepted in Australia. The plan covers the human resource needs of the organization and places emphasis on leadership, collaboration, participation and valuing staff to reach their full potential. The analysis process must begin with an analysis of both the internal and external environments where they can see the source of their strategic inputs (Hanson D, 2011). Inputs help a firm identify key things such as core competencies that are unable to be matched by others (Hanson D, 2011). An example Richard Branson’s business knowledge and personality- it cannot be imitated by any competitors. All businesses aim to earn good returns. Virgin Blue is no different as they found an opening in the market for low cost carriers and entered and has “rapidly grown to establish itself as one of Australia’s strongest domestic airlines. Virgin Blue Airways seeks to be the carrier of choice in Australia for all types of passengers. It intends to achieve this by ensuring top class services at low costs. Virgin Blue has targeted the full service market leader, Qantas, by positioning itself as an airline for executives who can avail themselves of ‘Premium Economy’ services. The 21st century competitive landscape has changed the nature of the competition in industries (Hanson D, 2011). Technology and technological changes in the environment has had the biggest influence on Virgin Blue. The company has been quick to establish a scheduling system that enables them to be more efficient and cut costs. Innovations in the 21st century have brought about changes in terms of service in many industries. Virgin is also using a self check in system cutting staff and with it costs. This shows that Virgin is innovative and is willing to change with the times. History Virgin Blue is an Australian low-cost airline, it is Australia's second-biggest airline as well as the largest airline (by fleet size) with the Virgin branding. The airline serves over 28 cities and towns in Australia, with Brisbane Airport as its epicentre, using a fleet of 75 narrow-body Embraers and Boeings. It was founded by the British businessman Sir Richard Branson’s Virgin Group and is based in Bowen Hills, Brisbane, Queensland, Australia (Branson, 2010). Virgin blue was launched on 31st august 2000, with two Boeing 737 and 400 leased from the sister airline (Virgin Atlantic). The firm benefitted with the failure of Ansett Australia in 2001. Virgin Group’s Brisbane-based subsidiary Virgin Blue Airlines began operation in Australia in the year 2000. They began with just 280 members and two planes flying the routes from Brisbane base to Sydney and return. Having succeeded in running a student magazine in London, Sir Richard Branson founded Virgin a small mail order company in 1970 at the age of 20. In 1984 Virgin Atlantic Airways had been established as a British International Airline. 2002 Virgin Blue counts 1300 team members flying 17 aircraft servicing and 18 different routes. Today, the Virgin Group has expanded into international music retailing, book and software publishing, film and editing facilities, clubs, travel, hotels and cinemas through 300 companies worldwide in 25 countries, employing over 35,000 staff. Virgin Blue aims to be an innovative and vibrant Australian airline with a focus on delivering low fare travel to flight guests. This end is achieved through a managed reduction of operating costs that are in turn passed onto flight guests in the form of cheaper airfares. “Virgin Blue is based on the idea that people would fly a lot more if it cost a lot less” SWOT Analysis Albert Humphrey’s SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses/Limitations, Opportunities, and Threats involved in business. These factors can be found within the internal and external environments. External Environment The External environment of a firm is divided into three main sections: general, industry and competitor environment. The general environment consists of six segments which are global, socio cultural, technological, political/legal and demographic segments (Hitt, M A Ireland, R D Hoskisson, R E, 2007-2008). These have a direct impact on the organizations strategies as for every segment that can be effected there must be a strategy in place to deal with the changing macro environment (Hubbard Rice Beamish, 2008). The external environment is extremely complicated to read and factors may be difficult for firms to grasp and take full advantage of. It is in the best interest of the business to analyse all the factors of the environment to stay ahead of the competition. The increase in terrorist attacks can be a factor in the global part of the macro environment and has the ability to impact heavily on Virgin Blue. As each attack on the USA, Spain, London happened to the western world, this would therefore lead to people feeling unsafe and not willing to fly with any airline. Economic factors in recent times would play apart in the stalling of success for virgin blue. “During the economic downturn of 2008 they recorded a $160 million loss for the financial year”. Challenges to the competitor environment include the new entrants in the market; Jetstar, Tiger and other low cost carriers. This will go a long way in decreasing market share of Virgin Blue. Once key challenges have been scanned, identified and analyzed it is important to identify the opportunities that still may exist as well as the threats. Internal Environment A company’s internal environment is based on the firm’s resources, capabilities and competencies (Hubbard Rice Beamish, 2008). Resources are the tangible and the intangible assets that an organization carries (Hubbard Rice Beamish, 2008). When these tangibles and intangibles are managed in the most efficient way possible then the business can create an above average return. The most important element of Virgin Blue is the intangible resource that they have in Richard Branson’s business knowledge and the trusted, admired and respected ‘Virgin’ brand. This is a competitive advantage as it creates attractiveness over any other products or services that they offer to their customers (White C, 2004) as it is believed Virgin Blues knowledge exceeds the competition. Strengths Weaknesses Low-cost airfares Trusted and respected “Virgin” brand Australia’s most on time airline Good aircraft Very relaxed, energetic and young customer service team A good flying record It is not an Australian owned company Opportunities Threats Develop business travel market Bringing on new airline partners. Improve IT systems Other destinations Introduction of low cost airlines such as JetStar and Tiger Qantas’s expose: More than 70 new aircraft will join the Qantas fleet by 2014 Terrorism PEST Analysis It is very important to consider the external environment that Virgin Blue Airways operates. To do this you a PEST (Political, Economic, Social & Technological) model is developed to help identify and understand the various environmental factors that can impact the company. Political Economic There is a need to review the existing company policies in order to meet the demands of the competitive business environment and the changing customer preferences. Restrictions under the Trade Practices Act to avoid expensive civil damage suits. potential fines, and bad publicity Need to adhere to Competition and Consumer Act 2010 (CCA) Comply with new government regulations and policies like the upgrade of security in airports due to 9/11 The possibility of the occurrence in global recessions brought about by companies closing down and the loss of jobs may have a direct impact on its business strategy. Also, the unprecedented fluctuations in the local and international economy will affect the financial conditions. Thus, there is a need for increase financial management strategies. Social Technological As an industry leader, Virgin Blue Airways’ management trend moves toward more reliable services across their customers for efficient product and service distribution. They provide the other needs of the customers supported by their management system and personnel. The social responsibility of providing outstanding services for consumers is always the main priority The issue of environmental friendliness e.g. the opportunity for customers to offset their carbon emissions for each flight by paying a slightly higher fare during the booking process. Monitor advances in technology and consider adopting new technologies that  can increase your marketing capabilities. The internet offers excellent opportunities to cost effectively research markets, analyze competitors and identify other ways to improve Virgin Blue Airways’ business. There is a need for Virgin Blue Airways’ business strategy to be aligned to any revolutionary technological changes impacting the industry like the balance in technology innovations and commitment to the environment. Human Resource Implications The SWOT and PEST Analyses of Virgin Blue Airways’ Strategic Plan has identified several human resource implications. These are: Recruiting and Retaining High Quality Staff Employment Flexibility Accounting for Performance Continual Learning Creating an Equitable and Diverse Workplace Creating a Safe and Supportive Workplace Culture 3.1 Staff and Organisational Renewal – Recruiting and Retaining High Quality Staff Recruitment and retention of high quality staff in a competitive labour market is of vital importance to Virgin Blue Airways. As Australia ages there is a concentration of staff in the older age groups and a relatively small proportion of younger company staff. Successful human resource management will require effective recruitment and retention strategies that take into account the following: Accelerated retirements will be accompanied by continued growth in passenger numbers as the participation rate rises, increasing the demand for new hires There will be increased competition for a limited number of quality employees in an increasingly international labour market in which Australian airline budgets are significantly constrained in contrast to many competitors. Traditional career structures may be less attractive to younger people than in the past. Well-being in the workforce has become increasingly important. High workloads, low financial reward careers may further constrain the supply of quality staff. Together with increased expectations and higher levels of accountability and reporting, there is the potential to become less competitive internationally. 3.2 Employment Flexibility Current collective agreements are aligned with the Virgin Blue Airways' strategic planning and budget process, and salary increases are based on capacity to pay. There continues to be moves towards greater flexibility at both the company and individual level, a trend seen as also important in recruitment and retention. 3.3 Accounting for performance – a high performance culture Human Resources analyses information from a variety of sources to assist in the development of institutional improvement strategies. The airline’s employee performance management framework linking individual and organizational performance objectives is an important element in the airline’s accountability framework. 3.4 Continual learning A rapidly changing knowledge base in the airline industry, rapidly developing information technologies, the competitive environment, the devolution of decision-making to lower echelons, and an increasing level of liaison with the community requires a high level of skill and knowledge on the part of employees. This can be developed only by a commitment to lifelong learning by each employee as well as access to a comprehensive range of employee development opportunities. The need to develop 21st century leadership capacity offers a particular challenge, particularly given the significant demographic change. 3.5 Creating an equitable and diverse workplace Diversity amongst employees which reflects the broader Australian community has the benefit of building a broad base of community support as well as meeting important social, moral and human rights, and commitments to equity and diversity. A diverse staff will improve the quality of decision-making in the airline and is incorporated into its accountability framework. This commitment is not only important in terms of social justice but it an important attraction and retention strategy. 3.6 Creating a safe and supportive workplace culture Physically and psychologically safe work environments and safe work practices are key aspects of Virgin Blue Airway’s risk management strategy. This airline has a high commitment to safety, not only for its own employees but also for passengers and visitors. To maintain Virgin Blue Airways as an employer of choice requires a positive, inclusive and high performance culture marked by cooperation and respect, and where the work environment promotes work/life balance for employees. Virgin Blue has embarked on a mission to redefine the airline industry in the country. It isn’t something that can be done by a single person in a single day.  It will take the talent and determination of team members at Virgin Australia.  It is the people who will put the magic back into flying. Human Resource Policy Statement The HR implications discussed in the previous section will be narrowed down to recruiting and retaining high quality staff and creating an equitable and diverse workplace. Goal 3 of the company’s 2009-2011 Strategic Plan states, “Virgin Blue is “THE” employer of choice.” This goal consists of five objectives: Implement strategies to attract talented employees; Retain employees by enhancing the work environment and creating a culture that values employees; Invest in employees’ professional development and growth; Provide opportunities for all leadership staff to learn and share best practices with each other; Provide opportunities for all employees to learn and share with one another, encouraging better dialogue between employees and management. All five objectives are necessary to ensure a workforce that meets the company’s strategic goal and to secure the leadership and workforce resources necessary for the company to accomplish its mission, reach for its vision, and maintain its values. 4.1 Recruiting and Retaining High Quality Staff Virgin Blue Airways’ recruitment process is tailored to each individual role but typical elements may include: Interviews (face-to-face/phone/teleconference) Group sessions Reference checks Health assessment including alcohol and drug screens for safety sensitive roles Ability/psychometric testing Validation of certificates Background check They have embedded principles of fairness and equity into the recruitment process to ensure that the business operations and workplace fair and free from all forms of inequality and discrimination. While Virgin Blue has had the benefit of having a cohesive management team establishing its culture, the airline goes to great lengths to ensure that the culture is supported at all levels. Culture is about how you go about doing business with your staff, as opposed to how you do business with your customers, so you’ve just got to get the recruitment right.the airline looks for people who are optimistic, enthusiastic and humble. While he acknowledges the achievements of Virgin Blue – such as claiming a 30 per cent market share in an industry that has seen established competitors fall by the wayside – Highfield says the airline can’t afford to rest on its laurels. “Most of us are concerned about what’s still to be achieved, so I think a good dose of humility is important.” The airline uses behavioural event interviewing, in which applicants are asked questions to indicate particular behaviours and motivations that align with a Virgin Blue personality template. One of the key competencies in the template is a strong focus on customer service, which is paramount to the Virgin Blue culture. The motivations of interested applicants are also examined in the recruitment process 4.2 Creating an Equitable and Diverse Workplace Diversity, equity and fairness are fundamental to sustainable development and to the way that Virgin Blue operates. An equal and fair workplace and work relationships create a healthy work environment where people can flourish. A diverse group of people with varied backgrounds and experiences bring a more nuanced understanding of different circumstances and of different environments. When working together, this leads to better analysis and more innovative problem-solving. In addition to having several operational policies that address workplace equity, fairness and diversity, Virgin Blue has seven indicators to track the progress: Diversity Cultural diversity: number of different nationalities represented among employees and associates working for the company. Knowledge diversity: number of different academic degrees among staff. Equity Gender equality: female and male component of employees disaggregated by functional category. Percentage of Virgin Blue employees strongly agreeing that women and men have equal opportunities for professional growth in the company. Percentage of Virgin Blue employees strongly agreeing that women and men receive equal compensation for work of equal value Fairness Percentage of Virgin Blue employees strongly agreeing and agreeing that the company’s hiring practices are fair. Percentage of Virgin Blue employees and associates strongly agreeing and agreeing that policies on sexual and other forms of harassment are effective. Diversity Cultural Diversity: Number of nationalities represented among all employees at Virgin Blue Airways. 5.0 Strategic Human Resource Plan 5.1. Recruitment Planning: Vision 5.1.1 Background Recruitment is the foundation of any personnel selection process. Agencies cannot hire the best employees if they do not attract the best applicants. The best use of the resources available for attracting the best applicants can only come about through a well thought out plan. Recruitment planning takes into account workforce demographics and trends, the company’s “mission critical” job classifications, future workforce needs as well as current ones, the company’s strengths and weaknesses (SWOT), achieving or maintaining diversity in the workplace, and feedback from new and exiting employees. All of these factors are taken into consideration in adopting recruitment goals and the strategies. 5.1.2 Strategic Recruitment Plan This plan specifically addresses objective 3.1 – “Implement effective strategies to attract talented employees.” Objectives Strategies Timing and Resources Milestones Measures Goal 1: Make Virgin Blue’s examination and hiring procedures more efficient. -Develop an easier hiring-above-minimum process for qualified individuals. - Create a one-stop hiring and testing “shop” on intra/internet - Establishing a certification list directly from hiring interviews Recruitment procedures are revised within 4 months New recruitment policies to be in place within 3 months. New employees are asked to evaluate our hiring process in the New Employee Survey. Goal 2. Dedicate resources to recruitment and retention - Develop a “Recruiter’s Toolkit” - Develop a training program for recruiters; work recruitment duties into existing duty statements. - Measure and evaluate recruitment activities to determine their effectiveness and the ROI of resources. Ensure there are enough finances for the recruitment and retention process. New employees willing to stay at the company for longer. Employee turnover reduced by 60% Goal 3. Use technology to raise the Department’s profile. - Send text messages and/or email alerts about job openings - Use technology (e.g. Twitter, etc.) for recruitment purposes. - Enhance the “jobs” page on the Virgin Blue’s website. Interested applicants contacted through technological means increased by 20% within 2 months New hires who were reached through technological means increased within 3 months. New employees are asked to evaluate the effectiveness of using technology to advertise for positions at Virgin Blue Goal 4. Actively market the company as a desirable employer. - Improve job opportunity announcements (simplify, clarify job descriptions; “sell” the position.) - Develop a recruitment brochure, portfolio, or a series of brochures to market Virgin Blue’s job opportunities. - Create mentoring and job rotations programs to improve employee retention levels. More applicants per job opening Get highly qualified personnel from the large pool of applicants within 2 months New employees are asked to evaluate the company’s job marketing strategies. 5.1.3 Major Assumptions Virgin Blue has a strategic recruitment department Employment is policy is applied across all levels of staff. Human Resource goals were obtained from Goal 3 of the strategic plan. Any % used was not based on any mathematical formulae. 5.1.4 Contingency Plan Risk Mitigation Strategies 1. The recruitment staff may fail to fully utilize technology tools Train the recruiting staff and HR on various technological aspects. Assign technological aspects to a competent PR and 2. Marketing strategies may backfire on the firm Gauge the reaction of potential hires to the various marketing strategies Have many options incase some of the strategies do not resonate well the potential hires. 5.1.5 Ethical Considerations - Ensure Virgin Blue is an equal-opportunity employer. - Ensure the recruitment policies apply to all hires - Personal information such as medical and psychometric reports are kept private. Conclusion In essence Virgin blue has achieved to the best of their ability strategic competitiveness. The correct procedures in formulating, implementing and evaluating a strategy that has been put in place is key to the success of any business. The evaluation of the firm’s external as well internal environments have set a path for Virgin Blue to continue to make above average returns and achieve competitiveness in a highly competitive market. With Virgins integrated cost leadership/differentiation strategy they have positioned themselves in a way that enables them to have success for several years yet. The Human Resource Strategic Plan will therefore help the company in ensuring that its most important asset, human capital, is well utilized in achieving its strategic plan. References MBA Hakime Isik-Vanelli, 2004, Marketing Plan for Virgin Blue 2, Munich, GRIN Publishing GmbH Becker, B. & Huselid, M. 2001. The Strategic Impact of HR. Harvard Business School Publishing, Balanced Scorecard, May – June 2001 Hanson, D Hitt, M A Ireland, R D Hoskisson, R E (2011). Strategic management competitiveness and globalistation. 4th ed. Australia: cengage. 7 Business dictionary. (2011). strategic management. Available: Last accessed 18th October 2011 Virgin Blue Case Study. Anti Essays. Retrieved October 15, 2011, from the World Wide Web: Hitt, M A Ireland, R D Hoskisson, R E (2007, 2008). Strategic management competitiveness and globalization. 8th ed. Australia: cengage. 7 Hubbard rice beamish (2008). Strategic Management. Australia: Pearson. 69. White, C (2004). Strategic Management. New York: Palgrave McMillan. 270 Virgin Blue Website. Retrieved October 14, 2011, from the World Wide Web: Read More