Strategic Management: Strategic Directions Folloed by Virgin Atlantic

Topics: Airline, British Airways, Singapore Airlines Pages: 14 (4749 words) Published: April 12, 2010
1)Executive Summary
2)Introduction of Company
3)External Environment
4)Company Financial Performance
5)Competitive Strategy
6)Strategic Direction of Development
7)Methods of Development
8)Conclusions and Recommendations
1)Executive Summary

This report aims to evaluate the current strategic directions followed by Virgin Atlantic. Initially we discuss the organisation’s mission statement and identify how the vision of the company is reflected though the strategic objectives. It is established at CSR plays an important role one Virgin Atlantic as it is seen to have principles and high standards on acceptable behaviour, BBC News (2009).

External factors are evaluated using a PESTLE analysis and it is made clear that the Airline Industy as a whole is suffering financially in the economic turndown. With the well publicised fear of global warming and the level of emissions airlines are giving off is resulting in the government putting pressure on Virgin Atlantic and others to find ways of reducing their C02 output by increasing fuel costs, Virgin Atlantic (2009). Social trends are examined to determine the appeal of air travel and why consumers continue to fly with luxury airlines like Virgin Atlantic over smaller no frills airlines.

The financial performance of Virgin Atlantic is analysed over a 5 year period looking at key ratios to determine the sales and profitability of the organisation. These results are compared to British Airways financial figures as well as Ryanair’s to get a better understanding of how financially secure Virgin Airline is financially in comparison to its competitors.

An analysis is then conducted of the organisations competitive strategy which identifies, using Porters 5 Forces, that Virgin Atlantic fall under ‘differentiation focus strategy’ as they offer premium priced products for a high quality service.

Results from Ansoff’s growth vector determine the strategic direction of the Airlines development. The airline’s growth remains competitive through demand in existing markets with existing products as well as newly developed ones. The methods of development are identified as code-sharing agreements between different airlines, allowing them to make use of each other’s resources at minimum costs.

It was concluded that, due to the success of Virgin Atlantic’s current 3 year strategic direction, the airline should extend this strategy. Other strategic concepts where recommended regarding the fight for climate change and they way in which the airline positions itself through branding.

2)Introduction to Company

Virgin Atlantic was launched by founder Richard Branson on the 22nd June 1984 Virgin Airline (2009).

2.1. The vision of the airline was to offer high quality services combined with good value for money. Working in Music industry for many years Branson himself knew little about the aviation industry therefore he used the advice of his partner, Freddie Fields to manage the venture along with his technical manager Roy Gardner Management Today (1998). As a result of working in the Music Industry Branson was all too familiar with celebrity obsessed culture and thus he packed the first flight was between London and Newark Liberty with some well known celebrities. Virgin Atlantic credit the use of the famous faces seen travelling on the inaugural fight as one of the factors of success in launching the airline, Virgin Atlantic (2009).

2.2. Virgin Atlantic employs a three year strategy which thus far has proved successful. The success has been down to their sound business model which is defined by their Mission Statement:

“To Grow a profitable airline, where people love to fly and people love to work.” Virgin Atlantic (2009)

Low cost airlines offer a typically...

References: Mintel Report ‘No-frills/Low-cost Airlines - UK - July 2007’
The Times (2009) ‘Virgin Atlantic to Cut 600 Jobs to 'Remain Strong '’ online at (Accessed 19th November 2009)
Glasgow Caledonian, ‘Strategic Management MGTM311 Division on strategy, Innvoation and Enterprize’ Chapter 2 pp 67-70 (2009)
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