This strategy report emphasizes on the analysis and evaluation of the current strategy, structure and key driving factors of Virgin Australia. Methods of analysis included PESTLE, Porter’s five forces, strategy canvas followed by the evaluation of strategic capabilities using VRIO matrix and SWOT. Economy and Technology proved to be the most significant factors through the PESTLE analysis. The influence through customer’s participation, reliability, innovative ideas and benefits on the aviation industry is huge. Porter’s five forces resulted in two key forces – the power of customers and the industry competitors are the two most significant forces in the market. The Strategy canvas framework compared the performance of Virgin Australia with its competitors Quanta’s and Jet Star. The results are:
- Virgin Australia should be to maintain a high level of customer service,
- keep on developing their highly skilled employees
- and ensure a magnificent Wi-Fi & In-flight Entertainment
The VRIO analysis yielded the following sustained competitive advantages:
- A most attractive employer in Australia
- Best Business Class 2017
- Australian’s most respected Company
- Positive brand reputation
Analysis through a cultural web provided the following results:
- Virgin Australia mainly never fails to encourage its employees with various programs like Female Leadership Development Program and employee benefits
- “Customer Centric” culture approach towards customers
- Existing Routines, rituals and organizational structures are leading to magnificent achievements
- The Brand and logo change was successfully established and change the perception of their customers by being a more professional business-like airline
We suggest that Virgin Australia should stick to its differentiation strategy to sustain unique in a highly competitive market to uphold its competitive advantages.
The Virgin Group is an irresistible brand with its ownership of different companies in various sectors like travel & leisure, health & well-being, telecoms & media, financial service, and aerospace. Virgin Australia Airlines was formed in November 1999 formerly named as “Virgin Blue, headquartered in Brisbane. It was rebranded as “Virgin Australia” in 2011. It is the second largest airline after Qantas and is currently employing over 9.500 employees. The revenue for the last year has been around $5 billion, by owning a fleet over 100 airplanes and carrying over 23 million passengers around the globe (virgin.com, 2017). Virgin Australia experienced a profit before tax in 2016 of $41.0 million; an improvement of $90.1 million compared to the financial year 2015, and also gained more market share through Tiger Air Australia in the domestic market (virginaustralia.com, 2016). According to the organization’s macro environment, the international capacity to Australia grew nine percent in the last 12 months, from October 2015 till September 2016. Especially China (+37%) and Japan (+21%) are significantly improving the trend. The Australian domestic aviation capacity for passengers only grew marginally up for about two percent for the last 12 months (Australia, 2016). The aim of this business report is to analyze Virgin Australia in its embedded environment. To create a holistic analysis it is crucial to have a look at the immediate industry.
By being the highest layer, the macro-environment is able to have a high or low impact on all embedded organizations in the industry. The PESTEL framework helps to analyze which factors tend to affect organizations. The result of a PESTLE analysis is a key driver which are shaping the future. The industrial environment consists of competitors who are creating the same sorts of products or services. The five forces of Porter are an appropriate analyzing tool in this case (Johnson, Angwin, Regner, & Scholes, 2014, p. 33). The strategy canvas compares the competitors on critical success factors and their perceived performance within the market (Johnson, Angwin, Regner, & Scholes, 2014). Through the described strategy analysis tools it is possible to highlight important success factors and significant weaknesses. The rating of the strategy analysis tools is based on the evident information through our research. As a result, an assumption is made after a comprehensive analysis.
Overall, the performance of Virgin Australia can be rated as good but still requires a few operational improvements to sustain in the aviation industry.
Key recommendations for growth:
There is a little recommendation for Virgin Australia to help improve its operations to attain sustainable growth.
- It is currently neither a low-cost carrier nor full cost carrier like its strongest competitor Qantas. It is recommended that Virgin emerges as a low-cost carrier so that it is affordable by everyone in the society
- Make good use of the profits occurred in 2016 to improve its safety ratings and increase the operation capital by increasing the number of shareholders
- Take the initiative to improve the organizational structure and supply chain program
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