Virgin Blue

Topics: Airline, Virgin Group, Low-cost carrier Pages: 31 (10452 words) Published: January 30, 2013
AJNRR Consulting

Virgin Blue Holdings
A Strategic Analysis

Prepared by:
Andy Ley
Joachim Brastein
Nathan Westgarth
Rishi Dave
Ron Stanley
* * Contents
1.Executive Summary2
2.Virgin Blue Now3
2.2Virgin Blue Overview3
2.3Virgin Blue’s Current Strategy3
3.Outside Virgin Blue4
3.2Industry Analysis4
4.Inside Virgin Blue6
4.1Capabilities, Distinct Competencies and Competitive Advantage6
5.The Virgin ‘Blues’ (Strategic Issues)7
5.1Positioning in the Market7
5.2Challenging Economic Conditions8
6.What to Do with Virgin Blue? (Strategic Options)9
6.1Cost Leadership Strategy9
6.2Focus Strategy9
6.3Differentiation Strategy9
6.4Strategy Analysis and Choice10
7.Virgin Blue Flying Ahead (Strategic Implementation)11
7.1Business Level Strategy11
7.2Corporate Level Strategy12
7.3Functional Level Strategy13
7.4Global Strategy13
8.Virgin Blue Summary and Future Outlook15
Appendix 1.Virgin Blue Detailed Overview and Shareholding18
Appendix 2.Virgin Blue’s ‘New World Carrier’ Strategy19
Appendix 3.Detailed Macroenvironment Analysis20
Appendix 4.Detailed Industry Analysis23
Appendix 5.Limitations of the PESTALG and Porter’s Five Forces Models26
Appendix 6.Virgin Brand Creation and Rebranding27
Appendix 7.Implementation for Varying Levels of Collaboration28
Appendix 8.Organisational Structure and Integration Difficulties29

Executive Summary
This report analysed the strategic position of Virgin Blue Holdings. The analysis highlights the current challenging economic environment and the strategic predicament in which Australia’s second largest airline finds itself. It was identified that Virgin Blue currently lacks a sustainable competitive advantage and is facing two major strategic issues. These strategic issues are identified at Virgin Blue’s business level. The first issue is that Virgin Blue is lacking a clear position in the market, it is ‘stuck in the middle’. In order to find a competitive advantage in this now intensely competitive low-fare domestic airline market, Virgin Blue has attempted to reposition itself away from new entrants of Jetstar and Tiger Airways. In doing so it is now positioned in the middle, somewhere between a low-cost and premium service. Virgin Blue is now running the risk of servicing neither market as good as its competition and losing customers on both ends of the spectrum. The second issue is that Virgin Blue is now quite vulnerable given the future economic outlook. Several strategic options were analysed, and a differentiation strategy was chosen as being most suitable to the company, and indeed the Virgin brand, as it was built on the organisational strengths while addressing the weaknesses and countering the threats. A bold strategic implementation has been outlined, which aside from Virgin still catering for the low-fare domestic (budget) market segment through its low cost legacy and further economies of scale, sees it creating a new “premium” domestic Virgin offering a differentiated product to this market segment, as well as various levels of collaboration options with international Virgin carriers in order to provide seamless international travel targeting the outbound and inbound international tourist market segment. Throughout all differentiation products remains the core focus on innovation, an enjoyable working environment, high quality service, as well as the distinct Virgin culture and unique Virgin experience for customers. Several strategic models are drawn upon in order to analyse the competitive forces in the industry environment, the macroenvironment, as well as Virgin Blue’s internal environment.

Virgin Blue Now
This report analyses the strategic...
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