Innovation refers to the creation of a new idea or a method that can help in providing a company with competitive advantage so that it can stay relevant in the current market. It is indicative of applying of better solutions that can help in meeting the new requirements of the present age consumer. The innovation can take place with the help of effective products, services along with technologies and then they should be made available in the market. This report throws light on the background of Virgin Australia Airlines and analyses the threats and opportunities in relation to the company. It also discusses about the external forces with the help of PESTEL, BCG Matrix and McKinsey GE analysis. It also elaborates on the strategies for growth and the innovation plan pertaining to the company.
Virgin Australia Airlines is the second largest airlines in Australia and it is the largest airlines in terms of fleet size. It is based in Brisbane and the airline was founded by Richard Branson who is a British businessman (Virginaustralia.com 2018). It was initially established by the name of Virgin Blue I the year 1999. Initially there were two aircrafts that used to operate on that of the single route but soon it got catapulted to the position of second largest airline within Australia after the collapsing of Ansett Australia. The airline currently serves 29 cities within Australia from the different hubs of Brisbane, Melbourne along with Sydney. Virgin Australia operates flights to Bangladesh, Belgium, Brunei, Canada, Denmark, Egypt, Finland, France, United Kingdom, Uited States and Thailand. There are flights to different cities like Abu Dhabi, Ahmedabad, Amsterdam, Athens, Auckland, Bahrain, Denver, Detroit, Geneva, Hong Kong and Houston.
External environment can help in the identification of strategic opportunities along with threats that can be beneficial for the organization in maintaining of its strategy. The external environment is inclusive of the industry environment, national environment and that of the macro environment. The government regulations in Australia along with fierce competition prevailing within the airlines industry has forced the company of lowering its cost (O’Connell 2016). It can help in the process of formulation of business strategies that can help them in surviving. The threats of Virgin Australia is on account of the presence of rival companies within Australia like Air Link, Airlines of Tasmania, Air North and Alliance Airlines (Hill, Jones and Schilling 2014). The premium services offered at an affordable price proves to be an opportunity for Virgin Australia Airlines. The opportunities have been created owing to the fact that Virgin Australia Airlines has been able to re-position itself from that of a budget airline to a diversified form of service. Virgin Australia Airlines has spent a large amount of money for upgrading the fleet and the relationship of the Group with the different unions has resulted to produce higher profit margin of Virgin Airlines Australia. Virgin Australia offers high quality product that hs helped the company in earning a strong strategic position.
The innovation in the aviation sector is important as the consumers want a pleasant travelling experience. The people travelling to their favourite holiday destinations or for business purpose needs a comfortable experience that can stay entrenched in their mind. Flying is undergoing changes at a fast pace and since the competition in between the airlines is very intense hence it is important to bring forth innovations in Virgin Airlines Australia. It can help the airlines in earning profits that can help them in staying ahead of their competitors. The innovations can help in broadening the scope for profit for the Airlines. The innovations can help in taking the industry to the next level that can help it rising above their competitors (Steinbach et al. 2017). Data should be contextualised and customer experience should be personalised that can help Virgin Airlines Australia in staying ahead of other competitors in the present industry. The data should be leveraged that can help in making the airlines efficient. Innovation thus forms the core of the future strategy of the Virgin Australia Airlines. The changes brought about in Virgin Australia Airlines can help in adding value to the company and can help in opening up the market for the airlines.
Political: Airline industry is hugely affected by the political condition prevailing in a country. The warm relations that Virgin Australia Airlines with different countries has helped in the creation of open aviation market for the airlines company (Wheelen et al. 2017).
Economic: Liberal aviation policy pursued by the Australian government has helped Virgin Airlines Australia in earning huge amount of profit. The decline in the pricing of oil have helped in increasing the profitability in relation to the airlines.
Social: Virgin Australia Airlines is the second largest carrier within Australia and it has helped the company in enjoying a huge amount of public trust along with support. The domestic partnerships within Australia has helped in boosting the customer base of Virgin Australia Airlines (Rothaermel 2015).
Technological: Investment in the arena of technology by the Australian government can help in the company in earning huge amount of success. Wi-fi along with Stan streaming is streamed in Virgin Australia Airlines that helps in providing an enriching experience to that of the customers.
Legal: The repealing of the carbon tax by the Australian government can help in relieving the legal complications pertaining to Virgin Australia Airlines.
Environmental: The aviation sector in Australia lays emphasis on the aspect of sustainable aviation fuel that can reduce the impact on the environment. Virgin Australia Airlines has fuels that are derived from that of bio mass that ensures the long-term fuel security in relation to the aviation sector.
|
Political |
Economic |
|
· Warm relations of Australia with other countries |
· Liberal aviation policy · Decline in pricing of oil |
|
Social |
Technological |
|
· Has public trust and support · Domestic partnerships in Australia |
· High amount of investment in the field of technology |
|
Legal |
Environmental |
|
· Repealing of carbon tax |
· Emphasizing on sustainable aviation fuel |
The flights sector of Virgin Australia has the capacity of generation of revenue on that of long term basis on account of the fact that fare promise is provided by the Airlines. It guarantees the customers of Virgin Australia Airlines that in the event of finding a lower price on that of the third party website Virgin Australia will match that particular price. High market share pertaining to Virgin Australia Airlines has earned it a distinct position in the industry and Virgin Australia Airlines helps in ensuring the fact that it is able to earn stable earning for the Virgin Group. Virgin Australia Airlines can hence be termed as a cash cow and it does not show any kind of negative impact on account of the slow industry development (Meyer, Neck and Meeks 2017). High market share helps in adding to the financial stability in relation to the firm. Virgin Australia Airlines makes significant contributions to that of the financial strength of the Virgin Group. The mature level of the airlines sector creates pressure so that it can maintain a profitable business but the cash cows work in a better manner inspite of having a saturated industry. Increase in revenue earnings for Virgin Australia Airlines is on account of the increasing number of the customers pertaining to Virgin Australia Airlines. Virgin Group is making use of the airlines sector as that of a cash flow that brings in high profit from Virgin Australia Airlines (Lasserre 2017). It does not belong to the stars category as the market of Virgin Australia Airlines has already expanded and created an exclusive position in the airlines industry. Virgin Australia Airlines has been able to make a $ 4.4 million profit in the second half year of the year 2017 (see Appendix A). The airlines was able to earn the highest amount of revenue within 10 years and the profit before that of tax was around 142 % (Lieberman, Garcia?Castro and Balasubramanian 2017). They were able to earn a massive profit of around $ 102.5 million (Lin 2015). Virgin Australia Airlines has thus been able to perform quite well and there is no ambiguity in relation to the future prospect of Virgin Australia Airlines. It hence cannot be termed as neither a question mark nor a dog within the BCG Matrix.
The Mc Kinsey 7s model of Virgin Australia Airlines can help in determining whether the different elements pertaining to the organization are aligned with the objectives of the organization. The strategy of Virgin Australia Airlines targets the reduction pertaining to cost along with improved yields. Business class has been introduced in Tasman along with Pacific Island that has acted as an effective strategy for Virgin Australia Airlines. The international seat capacity of Virgin Australia Airlines has also helped in earning it a distinct place among the airlines industry (see Appendix B). Virgin Australia Holdings has proposed a new structure pertaining to the business that can help it in complying with Air Navigation Act. It can help in limiting the foreign ownership pertaining to Australian international Airlines to that of 49 %. The cabin crew of Virgin Australia Airlines possess high amount of hospitality skills that can help them in ensuring the on-board safety of the guests. The style of working of the cabin crew is diverse and the employees of Virgin Australia Airlines are resilient who can work under immense pressure (Pereira and Caetano 2015). There are separate arrangements in Virgin Australia Airlines for those who have their vision or hearing faculty impaired, for those having pets and for those who suffer from medical conditions. Virgin Australia Airlines has now changed into the Sabre booking along with check-in-system in its network of flights (Garcia?Castro and Aguilera 2015). The flight bookings can be done with the help of the website of Virgin Australia that has helped in upgrading the system in relation to Virgin Australia Airlines. Virgin Australia Airlines wants to create a difference and it stands for the principles pertaining to money, quality and innovation (Yan, Cui and Gil 2016). This has helped the company in achieving competitive advantage and realize their objective.
Diversifying the business so that it becomes less dependent on that of low-margin commodity can prove to be the key for the success of Virgin Australia Airlines. The company has to confront the competitors like Tiger along with Jetstar who have cut down the prices. Virgin Australia Airlines has brought in different business friendly products that is inclusive of business class seat for that of eastern sea-board flight. The service provided by Virgin Australia Airlines is emerging to become more tailored (Johnston and Marshall 2016). It will aim at becoming more responsive along with flexible that can help in the creation of a strong bond with the customers and the staff. Virgin Australia Airlines focuses on the aspect of continuous improvement and unlocks different kind of thinking that can help in the creation of value for the Australian airlines.
An opportunity for Virgin Australia Airlines can be provided by the fact that it can deepen the relationship with that of Singapore Airlines. It can help in filling the void on account of the fact that cross- Tasman joint venture with that of Air New Zealand ends in the year 2018 (Salter and Tether 2014). Virgin Australia can make use of Singapore Airlines so that it can maintain presence within that of Melbourne- Wellington market. Virgin Australia in the present stage does not operate in this route and it can launch Melbourne Wellington that can help it in securing a distinct position within the Australian Airlines industry.
The innovation plan of Virgin Australia Airlines focuses on the IFE system that can allow the consumers of using their own device (phones and tablets). They want to change for that of the better by focussing on the consumers. Virgin Australia Airlines wants to provide heart felt service to their guests. The innovation strategy of Virgin Australia Airlines wants to keep people at the centre of their service delivery (Sari, Rinawati and Midiawati 2018). Content revolution is taking place at the global arena and superior technology can help in providing a pleasant experience to the consumers of Virgin Australia Airlines.
Conclusion
The threats in relation to Virgin Australia is owing to the presence of the competitor companies like Air Link and Air North. Premium services are provided by the Airlines at a price that is affordable and this provides opportunity for Virgin Australia Airlines. Innovations can help Virgin Australia Airlines in earning more profit. This can help in taking the airlines to that of the next level which can help the company in attaining competitive advantage. Virgin Australia Airlines has warm relation with the various countries that has successfully created open aviation market pertaining to the airlines company. Carbon tax has been repealed that can help in the process of relieving of the legal complications in relation to Virgin Australia Airlines. Virgin Australia Airlines can be called a cash cow and the firm is financially stable that can help it in earning more amount of profit. International seat capacity pertaining to Virgin Australia Airlines has helped it in acquiring a unique position within that of airlines industry. The new structure of Virgin Australia Airlines enables it to comply with that of Air Navigation Act that can help in attaining long term success for the company.
References
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