Shibu Thomas

09284818 MBA FT Autumn Cohort 2009

INCLUDEPICTURE "http://www.virgin.com/imgs/branding/virgin.gif" \* MERGEFORMATINET

NORTHAMPTON BUSINESS SCHOOL

Strategies used, evaluation and options available with Virgin Group. Focus Companies: Virgin Atlantic Airways MODULE:- STRM002

Module STRM002
JANUARY 30, 2010

From: Shibu Thomas - 09284818 MBA FT Autumn Cohort 2009 To: Prof. Ross Thompson

STRM002 Organisational Strategy

Shibu Thomas

09284818 MBA FT Autumn Cohort 2009

Contents
Chapter 1 Internal & External factors affected strategy.................4 Chapter 2 Were the strategies effective?.....................................5 Chapter 3 what options for future? ............................................9

Bibliography & References........................................11

STRM002 Organisational Strategy

Shibu Thomas

09284818 MBA FT Autumn Cohort 2009

Required

Works : 3000 + or - 10% One or two SBUs may be used Question 1 Any two models with detail analysis Internal analysis can be done... 1. Value Chain Analysis 2. Resourse base used industry 3. Core competencies 4. Financial Analysis External Analysis 1. PEST 2. 5 forces 3. MKT structure Question 2 Our opinion Identify the virgin strategies comment on it You may use SWOT analysis Question 3 Future strategies forecasting for Virgin 2 or three models can be used 1.. Ansoft 2. BCG Matrix 3. Border Clock 4. Porters Strategic 5. Organic growth 6. Portfolio I have attached the documents I could collect

STRM002 Organisational Strategy

Shibu Thomas

09284818 MBA FT Autumn Cohort 2009

If you have more information please forward us

Chapter 1 Internal & External factors affected strategy

Virgin is a leading branded venture capital organization found by Sir Richard Branson in 1970 having operations in 29 countries and employing more than 50,000 people in 200 virgin branded companies. Virgin group has business interests ranging from mobile telephony to transportation, travel, financial services, media, music and fitness. Virgin Atlantic Airways Ltd, an airline under the Flagship Virgin Group, is one of the largest long haul airline operating companies in the United Kingdom having turnover to the tune of 2.238 billions during the last financial year. Richard Branson was known to the records and music industry by early 80s as he came out of the blue and signed so many music albums which set record sales in that era. The Virgin brand started to take off in the music industry as they shock branded it with so many successful releases. Virgin Group Started their airline business in 1984, very modestly with threshold resources and competencies, as the group was only in to music business till then. It is inevitable to look in to the history of virgin as a group and about Sir Richard Branson as an entrepreneur to understand the virgin Atlantic airways inception, surviving all odds and growth as a world-class airline during the last 25 years. In ordered to get a fair understanding of the success of virgin group, we need to understand the favorable internal and external factors facilitated the success year on year. Internal factors facilitated the competitive advantage or core competence of Virgin Atlantic Airways is as follows:-

The leader & the brand Virgin Groups first and foremost obvious distinctive resource is its leader, Richard Branson and the extra ordinary People that make up the organization. Richard Bransons charismatic leadership style and entrepreneurial flair is an asset that other organizations are unable to replicate, and it is his personality, and the innocent appeal, that is synonymous with the Virgin Brand makes the company unique. Richard Branson who has identified the need of an airline which fulfils the service gaps left by the British airways and others in transatlantic routes and the limited choice available for the customers then. When Branson was asked about this in a later stage his comment was At Virgin, we have a strategy of using

STRM002 Organisational Strategy

Shibu Thomas

09284818 MBA FT Autumn Cohort 2009

the credibility of our brand to challenge the dominant players in a range of industries where we believe the consumer is not getting value for money. Richard Branson and his people identified various industrial sectors, where customers are treated with below par services or there is a service or product gap.

While considering a new business venture, Virgin study the market and if they can make a difference in terms of better service or product offering, and an opportunity to strike a good balance between cost and income, then they just venture it. Virgin brand is more recognized by customers as the synonyms for fun, innovation, success and trust. Virgin created a brand image which so familiar and about 90% brand recognition is there in customers around the world. Virgin as a group was very successful to carry their brand over a variety of industries and successfully up keeping it. Configuring the virgin brand as their core competence and leveraging it over portfolio of companies under the virgin umbrella. Though they have competencies and expertise in various operations, the Virgin brand is the dominant one which recognizes any of their product or services to the customer. As Virgin group have much diversified business interest their targeted customer base ranging from men or women from the age of 3 to 80, irrespective of where they live in the planet. Virgin Groups primary activities in creating customer value while offering any services or products from any of their SBUs is derived from their capability of deriving economies of scale as a large organization in their inbound & outbound logistics (Supply Chain Management) and the competencies derived from the wide range of operations, and the established CRM, Marketing and services included in their Group ERP. While considering the Supply chain management of Virgin Atlantic Airways Ltd, their growth from a leased aircraft to start their operations in 1984 to a fleet of 37 most modern Boeings & Airbus clearly indicate the effective supply chain management systems are in place and their inbound logistics in terms of long term procurement strategy with Boeing is a clear sign of long term sustainable procurement strategy. Virgins procurement policy is in line with their environment protection policy and carbon emissions norms as an airline operator. RFID Technology to track the high value aviation assets, Using advanced ERP suite Oracle 11.5.10 in their CRM helped them in positioning as a one-stop-shop for all the travel needs of their customer and could offer ancillary product and services. By Using WNS as their outsourcing partner from India for process management related to ticketing and lost baggage tracking, Virgin Atlantic reduced their operational cost significantly and derived a cost advantage over its competitors. Virgin quite often uses the differentiation strategy in their product and services and thereby gives customers the new choice which was not at all available in the market. For example the upper class passengers on Virgin flight can opt for the limo pick up to/from the airport or use the speed boat over Thames to avoid city traffic apart from the state of the art lounges at various destinations.

STRM002 Organisational Strategy

Shibu Thomas

09284818 MBA FT Autumn Cohort 2009

As a major corporate, Virgin Atlantic have offices in the US, Caribbean, South Africa, Hong Kong, Tokyo, Shanghai, Delhi and Lagos to coordinate its operations and ground handling at various locations. Virgin Atlantics co-ownership with Singapore airlines, gave them a better positioning in asian market and support from Singapore airlines in terms of ground handling and cargo and passenger services helped them to establish their operations in asia and far east and the US. Virgin Atlantics systems & infrastructure as an airline operator, fabulous people who shares the virgin culture, use of latest technology in operations and communications definitely given a competitive edge to virgin from the competitors. Virgin Atlantic operates in a high rivalry competition from within the industry as it competes in major reputed airlines in its routes. Hence clearly a distinctive or differentiation strategy is used in its product offering. Virgin go for an extra mile in terms of customer service hence could retain its customer and offered them other product and services. Virgin Atlantic is not immune from the threat of potential new entrants starting operations in their routes as surpassing the entry barriers is not a herculean task for the industry now a days. Everything including planes, check in gates and ground handling and staff are available for lease/rent or hire. However virgin is in a dominant position to compete head-on with the potential entrants in terms of low price or better service. More over virgin can channel financial resources from its group companies as and when it is required (though they are not doing it much) Threat from a Substitute mode of transport is not a viable economic proposition as long haul airlines are only manufactured by Boeing and airbus and virgin is one of the major customers for them. There is no reason to believe that virgin will not adopt or use a better fleet before its competitors do.

Bibliography & References

STRM002 Organisational Strategy

Shibu Thomas

09284818 MBA FT Autumn Cohort 2009

Brooks, I (2009), Organisational behaviour: individuals, groups and organisation, 4th Edition, Essex, pearson, page270-278 Hofstede, G (2009), A summary of my ideas about national culture differences, http://stuwww.uvt.nl/~csmeets/PAGE3.HTM , 02 December 2009. Bibikova A (2009) & kotelnikov V (2009), Cultural Intelligence (CQ) http://www.1000ventures.com/business_guide/crosscuttings/cultural_intelli gence.html, 2Dec 2009. Northampton Business School (2009). Course Module Guide HRMM002, Cross Cultural Management.

Peterson, B(2004) Cultural Intelligence: a guide to work with people from other cultures, USA, intercultural press.

Florence Yean Yng Ling & et al (2007), Encounters between foreigners and Chinese: Perception and management of cultural differences, Emerald Group Publishing Limited, Engineering, Construction and Architectural Management, V14, 6 page 501to 518

STRM002 Organisational Strategy