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Table of Contents
Table of Contents...................................................................................................1
Introduction........................................................................................................... 2
9. Conclusion:...................................................................................................... 17
References:..........................................................................................................19
AHMED NAYEEMUDDIN
ID: 08236986
Introduction
AHMED NAYEEMUDDIN
ID: 08236986
The main purpose of this report is to identify the key internal and external
factors that have influenced the Virgin blue group and strategies
employed with in the Australian airline industry. Once these
characteristics are determined this report will assessed the chosen
strategies it will conclude with at least two or three strategic options
available for Virgin Blue Group with few strategic recommendations based
on the analysis performed.
identify the core competencies of Virgin Blue and it will employ generic
strategy frame work developed by Prof Michael Porter. After performing
the internal analysis, this report will analyze the external industrial
analysis of virgin blue by employing Porters five forces model.
AHMED NAYEEMUDDIN
ID: 08236986
2. Differentiation strategy
3. segmentation strategy
AHMED NAYEEMUDDIN
ID: 08236986
them extra modes of transports such as car, train and bus. Low
fares are all also offered to one way travelers which are bit
unlike for traditional full service airline. High fares are set on the
basis of demand for specific flights and date of departure. 75%
of tickets are offered at low available fares once it is filled up
they will increase price per seat. (www.virginblue.com.au)
AHMED NAYEEMUDDIN
ID: 08236986
AHMED NAYEEMUDDIN
ID: 08236986
From the above analysis it is clear that the main success factors
of Virgin blue’s strategy are low fares, point to point service,
homogenous aircraft fleet, simple process of business and lean and
mean work force and differentiation of products.
4.3 Barriers to Entry and Exit: Due to heavy costs and high risks
allied with airline industry the entry of competitors is not a major threat.
However, high value of services has high impact on the level of rivalry.
Heavy financial requirement of this airline industry both entry and exit no
AHMED NAYEEMUDDIN
ID: 08236986
4.5 Buyer Power: Traditionally customers were not given many choices
in airline industry in fares to destinations on which there are limited
airlines that operates on any given route. But by introducing low fare air
lines virgin blue have changed this dynamic by offering a number of
choices for any given destination, of different fares provided by other
airlines (Shaw,2004).
The current strategy of virgin blue stays unaffected by its unique market
strategy when it has joined Australian market. It’s mentioned earlier its
corporate strategy stands on its slogan “keep the air fair”, and this is
attain by LCCs (low cost carriers) business model. However it is
evolving this LCCs model into transformational strategy of business
based on network carrier model of business where it is striving to be a
new world carrier, which is nothing but airline which get utmost yield by
giving first class service. The consent is that company’s strategy
depends on low cost generic strategy but use service delivery as major
differentiator in market. (www.virginblue.com.au)
AHMED NAYEEMUDDIN
ID: 08236986
If you observe one of the Virgin blue’s strength is low cost operations
but on the other hand it has got Achilles' heel like service resources are
less by low cost. (O’Connell and Williams, 2005)
As One of Virgin blue’s competitors Ryan air, Jet star has also adopted
the same strategy by prioritising its strategic position in market on short
term profit maximisation. It has employed low cost strategy to cut prices
even more to strengthen the financial pain on their competitors (Albers
et al, 2010).
AHMED NAYEEMUDDIN
ID: 08236986
AHMED NAYEEMUDDIN
ID: 08236986
AHMED NAYEEMUDDIN
ID: 08236986
It has to work out on its cost effective strategies bit more as its
major competitors Ryan air, Qantas and South West airlines are
also cutting down there operating costs by marking their margins
down to attract customers.
offering low prices for best in class service than their competitors. It
can also develop personalized media centre for all customers which
comprises of following (Ragins and Greco, 2004):
Virgin blue can adopt any of the options available to it from the
above OLI analysis to internationalize itself such as code contractual
agreements which are less capital intensive, or by building their
own base, or by having national subsidiary through FDI by holding
stake but can still operate under same brand name.
9. Conclusion:
AHMED NAYEEMUDDIN
ID: 08236986
Conclusion of this report is drawn upon the internal and external analysis
of Virgin Blue airlines. Virgin blue is one of the best low fare airlines
within Australia which holds about 32% of its market share which is a sign
of successful airline firms. However due to heavy competition in the
market it needs to observe its strategic position frequently to figure out
always available strategic options in order to keep up with competitive
market . For the firms competing in low-margin, high cost environment,
every strategy that generates market differentiation along with functional
tools of CRM which are part of its core business strategies(Kotler et al,
2000), is greatly smart way of attracting customers. Above strategic
option of internationalisation reveals that market is demanding
international low fare airlines with best in class services. To become
successful low fare airlines in future Virgin blue needs to find appropriate
environment to make their strategic options work effectively. In order to
use available strategic options this market demands heavy capital so it
needs to strengthen its financial position which can be done by IPO. There
are some recommendations which may be help full in utilising the
strategic options available to it.
AHMED NAYEEMUDDIN
ID: 08236986
References:
Albers, S., Heuermann, C and Koch, B (2010) Internationalization
strategies of EU and Asia-pacific low fare airlines, Journal of Air Transport
Management, p. 1-7.
Gillen, D., Morrison, W., (2003). Bundling, integration and the delivered
price of air travel: are low cost carrier’s full service competitors? Journal
of Air Transport Management Vol.9, p. 15–23.
Lawton, T.C., (2002) Cleared for Take-off: Structure and Strategy in the
Low Fare Airline Business. Ashgate, Aldershot.
Web Sources:
www.virginblue.com.au
www.worldairlineawards.com
www.virgin.com
AHMED NAYEEMUDDIN
ID: 08236986