Virgin Atlantic Airlines Operations Management - Case Study Example

Operations Management- Individual Assignment Name of Student: Name of Course: Name of Instructor: Date of Submission: Executive Summary The service industry is one of the largest and fastest growing sectors in the global economy. The distinction of services from products is normally based on the inability to detach them from the provider. This report will give an insight into various aspects of services and will use Virgin Atlantic Airlines as a case study company. The introduction will give brief information about services. It will also state the thesis for the paper. The second section will give a brief history of Virgin Atlantic Airlines, the company that will be used as a case study organization for assessment purposes. Third section will outline the product/service package. It will reflect on the situation at Virgin Atlantic Airlines. The fourth section of the report will outline the distinctive characteristics of services as pointed out by Fitzsimmons and relate them to the airline. The fifth section will analyze the nature of services at the airline. The conclusion will give a summary of the main points discussed in the assessment. The works cited section will indicate the sources used in this assessment paper. Table of Contents Executive Summary 1 Table of Contents 3 Table of Figures 4 1.0Introduction 5 2.0Virgin Atlantic Airways 6 3.0 Service/ Product Package of Virgin Atlantic Airlines 7 3.1 Supporting Facility 8 3.2 The Facilitating Goods 9 3.3Information 9 3.4 Explicit Services 10 3.5 Implicit Services 10 4.0 The Nature of the Service/Product and How It Applies To Virgin Atlantic Airlines 13 5.0 Conclusion 14 Works Cited 15 Table of Figures Figure 1 Service Package (Fitzsimmons 22) 8 Operations Management- Individual Assignment 1.0 Introduction The success of business organizations is based on the degree to which the management understands the market and comes up with appropriate strategies to meet the needs of the customers. Business organizations are either product or service based. Product based companies focus on the ability of their products to provide utility to their customers. According to Fitzsimmons, the provision of products is normally followed by a provision of service (Fitzsimmons 17). The provision of service is an important strategy of increasing a firm’s competitiveness in the modern business world. Some of the after sale services in the business world includes installation, transport and servicing. On the other hand, service based companies focus on the ability of the services delivered satisfying the needs of their companies. In some instances the provision of services is followed by the provision of a product such as offering food in a hotel (Fitzsimmons 17). The following report will give a deep insight into service delivery. It will use Virgin Atlantic Airways as a case study company. It will give brief information about the company, its service/product package, characteristics and nature of the services /products offered by the company. The above sections will be discussed with reference to the reading by Fitzsimmons ‘Ch. 2, The Nature of Services’. 2.0 Virgin Atlantic Airways Virgin Atlantic Airlines was established in 1984. It was founded by Sir Richard Branson, a high profile entrepreneur who was previously known for Virgin Records, the famous music store. Sir Richard Branson had the vision of developing a high quality airline that gave its customers high value for their money (Virgin Atlantic Airlines 1). Its inaugural flight was scheduled between Gatwick and Newark. With his great entrepreneurial skills, Sir Richard Branson was focussed on ensuring that Virgin Atlantic succeeded in the market. With a strategic acquisition of great aircrafts, the airline was able to fly over 1 million passengers within its first decade of operation. The airline expanded its operations to other routes; flying to New York, Tokyo, Boston, Orlando and Los Angeles within the first decade of its operations. Virgin Atlantic brought the much needed competition to the Airline Industry in Britain and the world at large. In a move which was a test to Branson’s entrepreneurship decisions, he sold Virgin Records in 1992 to invest in a rather shaky Virgin Airline. This was great move which saw Virgin Atlantic improving its service delivery. In the same year, Virgin Airlines had introduced the first super economy service in the industry (Virgin Atlantic Airlines 1). The product was later awarded as the best premium economy class. In the nineties, the airline focussed on buying new planes, expanding to new markets, improving passenger service. In 1999, Branson sold 49% share of the airline to Singapore Airlines, a move which interjected 1.225 billion sterling pounds into the company (Virgin Atlantic Airlines 1). In the 2000s the airline focussed on designing better product /service bundles for its clients. During this time, the company introduced the upper class suite, Virgin clubhouses, Upper Class Wing, purchase of low fuel consuming aircraft and introduction of live performances during flights amongst other features which enabled the company provide great experiences to its customers; making it one of the major airlines in the world (Virgin Atlantic Airlines 1). 3.0 Service/ Product Package of Virgin Atlantic Airlines According to Fitzsimmons, a service package is defined to as a bundle of services and goods with information provided in a specific environment (Fitzsimmons 22). Linking this with Virgin Atlantic, the service package can be described as the group of products and services that a customer receives under specific terms. Often, service managers are unable to describe their products. This can be attributed to the intangibility of services and also the presence of consumers in the service delivery process. There are five main features of the service package are the supporting facility, the facilitating goods, information, explicit services and implicit services (Fitzsimmons 22). The following figure illustrates the features central to service experience. Figure 1 Service Package (Fitzsimmons 22) 3.1 Supporting Facility Supporting facilities are the physical resources that an organization must have in place prior to the provision of services (Fitzsimmons 19). For an airline, the basic supporting facility is an airplane. Virgin Atlantic Airlines boosts of a great fleet that enables it to provide great experiences to its customers. The main fleet of the company is comprised of AirBus A340 and Boeing 747 aircrafts (Virgin Atlantic b. 1). The company is also making plans of introducing 15 Boeing 787-9 dreamliners (Virgin Atlantic b. 1). Other physical resources which enable the company provide services to its customers include the Hangers and clubhouses although the resources are not direct linked to the service. 3.2 The Facilitating Goods Facilitating goods are the materials consumed or purchased by the consumer (Fitzsimmons 19). Generally, they are the deliverables delivered to the customers. The facilitating goods at Virgin Atlantic Airlines are flights. The company offers air transport to its customers around the world. There are various others services associated with the main service delivered. They include value adding services such as club houses, live performances, entertainment, foods and drinks among others. The airlines has strived to offer great services to its customers in various bundles that are provided in three main classes namely upper, premium economy and economy classes. The in-flight technology such as EmPower outlets which enable people to plug in their electronic devices such as laptops is another feature of the product package (Virgin Airlines 1). With the great facilitating goods in the product package, Virgin Atlantic Airlines has grown to be one of the airlines in the world which offers its customers an exceptional experience. 3.3 Information Information refers to the data that is available to customers or providers (Fitzsimmons 20). Its purpose is to enable business organizers to provide their customers with customized / personalized services. Virgin Atlantic Airlines information is made accessible to customers via the airline’s website. The website enables potential customers to book and pay for their flights and also view the seating arrangement at the planes; hence making them make more informed decisions when making their booking (Virgin Airlines 1). 3.4 Explicit Services Explicit services refer to those services that are readily sensed (Fitzsimmons 20). They include the intrinsic and essential features of the product/service being delivered. Virgin Atlantic Airlines boasts of great management that ensures that there is no large amount of time wasted before flights take off. Additionally, the comfort associated with their planes gives passengers a great experience. Lastly, added service such as clubhouses and onboard entertainment provides the customers with a great experience. 3.5 Implicit Services Lastly, implicit features are psychological benefits enjoyed by customers (Fitzsimmons 20). They may be sensed vaguely by the clients. Intrinsic features Virgin Atlantic Airline included confidentiality of passenger information and the trust associated with the brand. On this point, it is worth noting that the Virgin Atlantic Airlines Brand is very strong in the market. Ideally, it is one of the reasons as to why the company is performing well in the market. 4.0 The Characteristics of Services/Products As They Apply To Virgin Atlantic Airlines There are various distinctive characteristics of service operations. According to Fitzsimmons, there is a need to distinguish between resources and inputs in services. Fitzsimmons points out that inputs are the customers themselves whole resources are employee labor, facilitating goods and capital (Fitzsimmons 18). The first characteristic of services is the participation of the customers in the service process. According to Fitzsimmons, the participation of summers in the service delivery process is a growing trend in service delivery. Instead of customer being passive buyers of the services, they become active in the process. This strategy is both beneficial to the buyers and customers. On the side of the business, participation of customers enables them to reduce personnel and it also receives free labor. On the side of the customer, he or she has the chance to received customized services, quality services and cheaper services (Fitzsimmons 19). Linking this strategy with Virgin Atlantic, it can be acknowledged that some of its service processes have substantial customer participation. The main one of them is on booking flights which involves payment and selection of classes and seats (Virgin Airlines 1). The online platform on the airlines website enables customers to do this. Other services which are associated with substantial customer participation included entertainment, clubhouse activities and dining. The second characteristic of services is simultaneity (Fitzsimmons 18). Simultaneity refers to the simultaneous production and consumption of the services. Owing to this characteristic, managing inventories in the production and consumption of services is not applicable. Ideally, services are consumed as soon as they are being produced. Linking this characteristic with service delivery at Virgin Atlantic Airlines, it can be acknowledged that the customers are provided with air transport as the planes fly; hence the simultaneous production and consumption of the service. The Third characteristic of services is perishability (Fitzsimmons 18). According to Fitzsimmons, services are perishable commodities. For this reason, the maximum utilization of the service capacity is usually a challenge to the management of companies. Linking this with Virgin Atlantic Airlines, it is worth noting that their services are perishable as well. Once all their seats are not fully booked, they incur losses from the perishing of the services of the empty seats. In order to ensure that the company optimizes on its service capacity, it introduces value adding services such as entertainment and product package proliferations so as to meet the needs of a wider market. Additionally the company has invented on innovation so as to create great experiences. Its investment in technology such as in bigger capacity aircrafts and low fuel and alternative fuel consumption aircrafts has enabled the company tackle the challenge of perishability of their services. The fourth characteristic of services is that they are intangible (Moeller 362). According to Fitzsimmons, services are concepts hence cannot be patented (Fitzsimmons 20). In order for organizations to benefit from the innovations made on services, they ought to expand rapidly in a bid to grasp a larger market share before competitors start to stream in. This explains the reason as to why Virgin Atlantic Airlines expanded rapidly during its initial years as it still does in the modern times. As outlined earlier, the airline had flown over 1 million passengers within its first decade of operation. The company has also increased its flights and also ventured into new markets in America Asia and Africa. Organizations also turn to franchising so as to sell its idea to the market rapidly (Fitzsimmons 20). Virgin Atlantic Airlines sold 49% of its stake to Singapore airlines through a capital sourcing strategy by Sir Richard Branson (Virgin Airlines 1). This enabled the company to expand its business to new markets and also develop new customer service processes reengineering. According to Fitzsimmons, the intangibility of services presents a problem to customers since they are not able to evaluate how service feels like beforehand as opposed to the case of products where they can analyze products before making their purchase decisions (Fitzsimmons 20). So as to influence the decision of the customers, companies invest in branding. Successful branding enables organizations to achieve good market reputation in addition to creating good images for themselves. Fitzsimmons points out that reputation plays an important role in determining the choice of customers. On this point, it is worth noting that the success associated with Virgin Atlantic is partly based on the ability of the management to build the airline via brand values (The Times 100 1). The last characteristic of services is heterogeneity. According to Fitzsimmons, the intangible nature of services and the participation of customers in the customer delivery results to variability of services in various customers (Moeller 363). The variability of services from one customer to another is not pronounced at Virgin Atlantic Airlines. This is because of the fact that the aircrafts operate in the same manner. Additionally, the provision of services is done to a large number of people all of whom are given the same service as a ‘batch’. However, variability exists in such services as entertainment, food and drink service and services at the Airline’s clubhouses. 4.0 The Nature of the Service/Product and How It Applies To Virgin Atlantic Airlines The nature of services and products is depicted in its characteristics as seen in the discussion section above. It can be acknowledged that air transport services are simultaneous in that the services are consumed as soon as they are produced, intangible, heterogeneous/ variable and perishable in nature. Additionally, it is possible to delink services from their provider. This is commonly referred to as the non-ownership characteristic of services. As opposed to products, the ownership of the services is not transferred to the clients. Linking this with Virgin Atlantic, it can be noted that the passengers do not own the aircraft or any facilitating goods. Instead of this, the customers rent the facilitating goods for the period within which the services are delivered. For instance, if the passengers are on a 6 hour flight, they own the facilitating goods for a period of 6 hours. The customers enjoy the service package as presented by the airline. This includes other value adding services on top of flight services. This report has given an insight into the service package by Virgin Atlantic Airlines above. The airlines company can be regarded to as an airlines factory. According to the service process matrix by Fitzsimmons, the degree of labor intensity and interaction and customization at Virgin Atlantic is low. As a result of the nature of Virgin Atlantic Airlines being a service factory, the company managers and any other managers managing airlines are faced with the challenge of capital decisions, technology developments, service delivery scheduling and the management of demand during peak seasons and promotion of serviced during off peaks (Fitzsimmons 26). 5.0 Conclusion Concluding, this report has been able to give a deep insight into service delivery. The assessment has used Virgin Atlantic Airlines as a case study company. The report identified that organizations are either service or product based. Virgin Atlantic was identified to be a service based company whose main area of operation is offering of air transport services. From a short background history of the company, it was identified that it has been able to grow to its current success by the successful integration of strategies that have improved customer services at the company. The report also gave an insight into the product/service package with reference to Fitzsimmons reading and Virgin Atlantic Airlines. It was seen that the product package is normally made up of supporting facilities, facilitating goods, information, explicit and implicit services. The report also analyzed the distinctive characteristics of services with respect to the airline and Fitzsimmons reading. The assessment evaluated participation of customer sin service delivery, simultaneity, perishability, intangibility and heterogeneity of services as they apply to the airline. Lastly, it was identified that services cannot be detached from the provider. It was also seen that the airline company is a services factory by nature. Works Cited Fitzsimmons. Ch. 2. The Nature of Services. (n.d) 17-30 Moeller, S., 2010. Characteristics Of Services – A New Approach Uncovers Their Value. Journal of Services Marketing. 24.5. (2010); 359 – 368 The Times 100. Building and Airline through Brand Values. A Virgin Atlantic Case Study. The Times 100. (2014). http://businesscasestudies.co.uk/virgin-atlantic/building-an-airline-through-brand-values/introduction.html#axzz2zL4a2XGq Virgin Airlines. About Us. Virgin Airlines.(2014). http://www.virgin-atlantic.com/us/en/footer/about-us.html Virgin Airlines b. Our Aircraft. Virgin Airlines. (2014). http://www.virgin-atlantic.com/us/en/the-virgin-experience/our-fleet.html Read More