Porter’s Generic Strategies – Virgin Atlantic Airlines

Cost Leadership Strategy

Describe about the Porter’s Generic Strategies – Virgin Atlantic Airlines.

Virgin Atlantic Airlines always tries to understand the needs of its customers. Virgin Atlantic Airlines has been rendered to as niche airlines who are seeking value for money The airlines has managed to serve both local as well as international locations. In order to have an edge over its competitors, Virgin Atlantic Airlines has adopted various generic strategies. The porter’s generic strategies applicable on Virgin Atlantic Airlines as follows:

(Source: Virgin Australia, 2016)

Cost Leadership: It has been seen that, low cost fares & mid – range price airlines are appealing more customers these days. Virgin Atlantic Airlines cannot be covered under the low cost fare airlines but it has certain pioneered features which helps them to differentiate their goods and services from other airlines.

Differentiation: It has been seen that, the recent change in the aviation market has changed the needs of the customers. Virgin Atlantic Airlines offers its customers with flexible and customized services to its passengers. Passengers feel delighted when they are offered services of their choices which help in increasing the customer satisfaction levels.At Virgin Atlantic Airlines, differentiation is everything. The upper class passengers are able to access the in house bar area, spa & office are. The passengers even have an option to book a limousine or motorcycles for airport transfer (Virgin Australia, 2016).

Focus: The focus of Virgin Atlantic Airlines is to enter the niche markets (flight destinations) as well as understand the dynamics of the market. It shall be taken into consideration that, focus strategy does not work alone and hence it shall be teamed with either cost leadership/ differentiation strategy.

As mentioned in the case study, the key trends of Virgin Atlantic Airlines shows that the turnover for Virgin Atlantic has risen from 1,630 (2005) – 2,870 (2013). The number of passengers using Virgin Atlantic Airlines is on a constant rise but the rise is not huge

It shall be taken into consideration that Bowman’s Strategy Clock in case of Virgin Atlantic Airlines might lead to negative thinking & justify nothing. It can be argued that, the eight different strategies together might hamper the profit levels. The Bowman’s Strategy Clock refers to a tool which is biased towards the direct competitor strategy in order to increase the market share. The strategies of Bowman’s Strategy Clock are not so clear on the profit front in the customer matrix. Therefore, Bowman’ strategy clock are not the best strategies for Virgin Atlantic Airlines as compared to the porter’s generic strategies discussed above.

Differentiation Strategy

Virgin Atlantic Airlines has been using porter’s generic strategies in order to be in the competitive airlines run. One of the strategies adopted by Virgin Atlantic Airlines is to promote its brand all over the market place with the help of differentiation. The differentiation strategy has helped Virgin Atlantic to be known as a convenient and well equipped airline locally or internationally. With the help of differentiation, Virgin Atlantic Airlines had over powered other airlines by a deep cut in their service cost and providing outstanding services to their target audience. One of the biggest strengths of Virgin Atlantic Airlines is to use highly modern technology so as to act smart as compared to the other similar airlines (Shaw, 2011). Differentiation in case of Virgin Atlantic Airlines can be seen as mention in the case study, that they were the first airlines to provide personal entertainment to its passengers. Virgin Atlantic Airlines is the first airlines to operate Airbus A340-600. They were the first European airlines to operate Boeing 787-9 in October 2014.

It is seen that Virgin Atlantic Airlines is hybrid in nature (i.e. amalgamation of cost leadership followed by differentiation). They follow the simultaneous strategy i.e. they customize the products at a price which is similar to those of mass products. Customization can be seen by mix & match of the components. Some of the advantages of being hybrid at Virgin Atlantic Airlines is high innovation closely witness the needs of the customers, organizational learning & take up strategic decisions. Hybrid strategy has helped Virgin Atlantic Airlines to achieve high levels of differentiation with low prices as compared to its competitors. This hybrid strategy will help the airlines to provide benefits to the customers (Shaw, 2011). Based upon the case study, it can be judges that Virgin Atlantic Airlines is hybrid in nature as it uses a different marketing strategy to market the airlines i.e. each aircraft has a distinguished name usually feminine in nature such as Lady Bird, Ruby Tuesday & Island Lady.

Competitive Advantage refers to strategies which are looked upon by the businesses in order to have a competitive edge over its competitors. There are various business strategies which helps any given organization to practice competitive advantage. Competitive Advantage has been referred to as the best approach for any organization as it helps the company to have a competitive edge as compared to its rivals (Kotler & Keller, 2008).Some of the ways in which Virgin Atlantic Airlines has attained competitive advantage as compared to its competitors are providing quality services to the customers. The main focus of Virgin Atlantic is to focus upon quality services as compared to prices for the same. The main aim of Virgin Atlantic Airlines is to provide value for money. Thought the tickets are expensive as compared to its competitors but the service provided by the same is commendable & much appreciated. It has been seen that, team Virgin Atlantic aims at making the passenger’s journey memorable one. Virgin Atlantic Airlines have different product offerings for different passengers (De Kluyver & Pearce, 2009). As mentioned in the case study, Virgin Atlantic Airlinesoffers its passengers with three types of cabin configuration i.e. economy, premium economy & upper class. As per the facts mentioned in the case study, Virgin Atlantic Airlines was the first airline to provide its passengers with personal entertainment for all the three cabin configurations.

As a part of commitment so as to operate in a sustainable business Virgin Atlantic engages stakeholders on regular basis. The key stakeholders at Virgin Atlantic Airlines are those who are closely linked or might get affected or the airlines operation might be affected by the same. Some of the main stakeholders of Virgin Atlantic Airlines are employees, guests, shareholders, government & regulators, community groups, government, and members of the union & major airlines supplier. The summary of the key shareholders at Virgin Atlantic Airlines have been done as follows:

Employees	·         Employees have been referred to as the key shareholder at Virgin Atlantic Airlines. ·         The Virgin Atlantic Airlines engages its staff members with direct communication (via emails & telephone). ·         An annual staff engagement survey along with quarterly employee road shows are conducted for internal training & development (T&D) purposes (Porter & Phillpot, 2004).
Guests	·         The next key shareholders at Virgin Atlantic Airlines are the guests. ·         Virgin Atlantic Airlines engages with their guests in a number of ways i.e. social media, frequent flyer program, websites, guest’s relation team, in flight magazines, in flight radio channel, guests contact center & touch point guest’s journey (De Kluyver & Pearce, 2009).
Shareholders & investors	·         At Virgin Atlantic Airlines shareholder & investors are known the main stakeholders as they might have an impact on the organizations strategy. ·         Virgin Atlantic Airlines engages the investors with the help of survey, annual general meetings (AGM), annual reports, sustainability reports & annual briefings (De Kluyver, 2000).
Community Groups	·         Virgin Atlantic Airlines engages with the community groups with the help of an official charitable foundation by the name Red Jet & Virgin Unite (a non – profit organization of the Virgin group globally). ·         Virgin Atlantic Airlines also engages with the community groups who live nearby the airport area with the consent of Community Aviation Consultation Groups. ·         Virgin Atlantic Airlines also engage directly with the non – government organizations (NGO’s) with the help of partnerships and other programs.
Government & regulator	Virgin Atlantic Airlines engage with the government and other regulatory bodies through a well co-ordinated group such as government relations and group executive. The airlines are in direct touch with the regulatory bodies in their consultation process, advisory groups & policy forums (Shaw, 2011).
Union	Virgin Atlantic Airlines engages directly with the members of the union and discuss on the various topics such as internal training & development (T&D) practices, negotiation, health & safety measures and enterprise bargaining agreements (Porter & Phillpot, 2004).
Suppliers	Virgin Atlantic Airlines engages directly with the suppliers with the help of procurement, execution & ongoing contract management.

Key resources and competencies:

Resources (what we have)	Competencies (what we do well)
1.      Some of the key resources available at Virgin Atlantic airlines are Plant, equipments, cash, borrowing capacity & reserves. 2.      Human capital in terms of knowledge and skills in case of Virgin Atlantic airlines are goodwill attached along with the airlines and reputation in the airlines industry.	1.      Virgin Atlantic airlines shall be able to fly and manage the passengers to reach safely to their destinations. 2.      Virgin Atlantic competes on global availability of flights. It has been seen that, the competitors attack them on the basis of price as well as the level of customer service.

Shareholder Mapping: Power & Interest Matrix:

A Minimal Effort Ø  Union	B Keep Informed Ø  Shareholders &Investors Ø  Government & Regulators
C Keep Satisfied Ø  Community Groups	D Key Players Ø  Clients/ Guests Ø  Employees Ø  Suppliers

A project is termed to be successful if and only if the stakeholder/ shareholders are satisfied. Shareholders or stakeholders are individuals who have either invested their time, money &interest in a particular project. They are the ones who are actively involved with the project and have something to gain or lose in the project. It shall be taken into account that, key shareholders can either make or break the success of the project. Even if all the deliverables of the project are met & the objectives are satisfied but the stakeholders are not happy then the nobody would be happy (Kotler & Keller, 2008).

Virgin Atlantic Airlines have number of resources which would help them to attain competitive advantage over other airlines. The strongest resource applicable to the success of Virgin Atlantic is its strong brand & reputation attached along with it. Whereas, other success factors associated with the same, which might be imitated in future are itshigh customer service, better location(flight destination)& human resource (HR). VRIO (Value RarityInimitability & Organized) framework for Virgin Atlantic Airlines is as follows:

VRIO FRAMEWORK

Value: Virgin Atlantic Airlines cabin crew is known for its high degree customer orientation & one of the best service providers in the airline industry.

Rarity: Rarity provides competitive advantage. It has been seen that, the engine technology used at Virgin Atlantic Airlines is rare in nature.

Imitability: A strong established brand and reputation attached along Virgin Atlantic Airlines is not easy to imitate.

Organized: Virgin Atlantic Airlines tends to support a valuable rare & a difficult to imitate resource. This will help the airlines to have benefit in the long run.

References

De Kluyver, C. (2000). Strategic thinking. Upper Saddle River, N.J.: Prentice Hall.

De Kluyver, C. and Pearce, J. (2009). Strategy. Upper Saddle River, N.J.: Pearson/Prentice Hall.

Kotler, P. and Keller, K. (2008). Marketing management. New Dehli: Prentice Hall India.

Porter, M. and Phillpot, C. (2004). Michael Porter. London: Purdy Hicks.

Shaw, S. (2011). Airline marketing and management. Burlington, Vt.: Ashgate.

Virgin Australia. (2016). Stakeholder Engagement | Virgin Australia. [online] Available at: https://www.virginaustralia.com/au/en/about-us/sustainability/stakeholder-engagement/ [Accessed 11 Aug. 2016].