Strategic Management

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Executive Summary
Virgin Blue was established in the year of 2000 in Australia. The actual group itself that is operating as the HQ is founded by an Englishman named Richard Branson. In its business debut years, Virgin Australia had already plunged itself into a very competitive world of airline business. Virgin may be hampered by different yet restrictive government regulations that are being implemented in Australia. But then again, Virgin had a great opportunity window that has opened up to them widely when Ansett collapsed in 2001. Thus, Virgin has been affected with a lot of internal and external environment since then. This is where a good strategic management is needed to drive Virgin into a better future. And as the business itself is expanding internationally, Virgin can adopt some of the many global strategies to reach its goals efficiently. One of the strategies that can be adopted is by diversifying the company into several other names. This has been done by Virgin Blue Australia, with using a name of V Australia as a premium international flights and Virgin Australia in domestic flights. And there is Polynesian Blue and other names as well under the management of Virgin Group. And the other strategy for Virgin to adopt is the business level strategy. There are five different strategies, with each one of it offering its own unique competitive advantages to the business. And these strategies will be explained further in the next chapters.

Introduction
Basically, there are three different Australian industries for an airline to look up to: domestic, regional, and international routes. During the past decade, Australian airline has had several new airliners. These three market has been quite competitive since the inception, with different airline had the majority of each of the market. But in 2001, Ansett Group collapsed, leaving the only airline that caters domestic flights were just Qantas and Virgin Blue. At this time, Virgin had a better chance to enter the market as one of its competitors was no longer in business. In fact, the Ansett airline collapse has opened up a new window for another competition, the regional route. Ansett had the majority of the regional domestic route, and by So, Virgin rapidly built its market share, even though they were still own third of the market back then. In the other hand, Qantas acquired Impulse Airline and made it as a base for another new budget airline, Jetstar. Since then, domestic airline market has been contested fiercely between those two airliners.

But in regards to international market, establishing a new airline is not as easy as domestic and regional routes. All Australian airline had been hampered by the Commonwealth regulation that really restricts their occupancy in airports across Australia. The regulation (part of it is the bilateral air service agreements) also controls the capacity of the aircraft seats on each route that the airline. These regulations really limit international airliners in using major airport spaces. Therefore a good strategic management, which is a long term planning to determine the airline’s future is heavily needed.

External Environment
Airline industry is always affected by plenty of external environments. In regards of the domestic air routes itself, domestic tourism contributes 40% into the market, followed by business sector and inbound tourism. Those factors alone consist of many other factors as the economy condition in Australia for one of them. Low economy activity or growth may cause a decreasing number of local travellers that makes the majority of the domestic market. The strength of the Australian dollar also plays part in international tourism fluctuations.

Politics; regulation changes will heavily restricts an airline strategic movement. In regards to international market, establishing a new airline is not as easy as domestic and regional routes. All Australian airline had been hampered by the...
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